The war between miners and farmers

To hear some people talk, the Land Access bill which passed through NSW parliament last week gives mining companies a licence to transform any farm of their choosing into an open cut mine, with the government's blessing. As a consequence, they say, farming in areas like the Liverpool Plains will be ruined forever and Australia will run out of food.

Clearly that is not the case – this kind of thinking is a product of the simmering war going on between farming and mining and, as always, truth is the first casualty.

The bill itself is actually fairly innocent, even if the government that presented it is not. Its purpose is to restore the relationship between farming and mineral exploration to what everyone thought it was prior to two recent Supreme Court decisions.

The emotional reaction to the bill, and the events leading up to the court decisions, show how touchy things are in the bush. With mining now occupying the pedestal once held by agriculture, especially since it saved Australia from recession, there is a perception that nobody cares about farming any more. Indeed, many who make their living in agriculture believe they are under siege.

There are good reasons why they might feel this way. Animal rights extremists misrepresent the industry in their campaign to end livestock farming. Organic food zealots overstate the risks of chemicals and fertilisers while claiming benefits for organic food that do not exist. Environmentalists accuse farmers of devastating the land, when the opposite is true. Climate change zealots blame farming for a major part of global warming. Consumer advocates demand low-price, risk free produce and then criticise it as bland and factory farmed.

All the while the regulatory noose tightens. Modern chemicals are more benign than ever, yet their use becomes more onerous. Workplace safety rules come close to making some jobs impossible and, in NSW, invite open season on employers. The movement of farm vehicles on public roads is a game of cat and mouse with authorities. And vendor declarations and other red tape are ubiquitous when selling almost everything.

Then there are prohibitions on land clearing, which led to the hunger strike by Peter Spencer and to other major public demonstrations. And just to ensure the paranoia is well-founded, the government now admits it is using aerial and satellite surveillance to detect illegal clearing.

Restrictions on land clearing are, in fact, an important contributor to sensitivity over the mining issue. Regulations that prevent land clearing are, one way or another, an encroachment on the rights of property owners to freely use their own property. For fairly logical reasons, many see the access rights of mining explorers in the same light.

In Australia, unlike most common law countries, mineral rights belong to the Crown rather than the owner of the land. That means they are, themselves, property. When a mining company is granted a licence to explore for minerals, often at considerable expense, in legal terms it also has a property right. The challenge is reconciling it with the property rights of farmers.

Neither side can claim particular virtue. Although gaining access for exploration requires negotiation of an access agreement, some mining explorers nonetheless discount the legitimate concerns of farmers – disturbing lambing ewes, leaving gates open, starting fires and going broke without paying for remediation are among them. And if mining ultimately occurs, there are concerns about the disruption of subterranean water supplies, pollution and land subsidence.

For their part, some farmers cling to notions of moral superiority based on food production or environmental preservation, claiming "you can't eat coal” and doing everything they can to be obstructive. So-called 'prime' agricultural land is said to be too good for mining at any price. Along with anti-mining advocates like the Greens (themselves no friend of modern agriculture), they infer that every sin ever committed by a mining company is an inevitable outcome of all exploration and mining.

There are other irritations too. Agriculture, which has traditionally paid low wages, now finds itself losing employees to well paid jobs with mining companies. Mining employees are bidding up rents and house prices in country towns, and exports of agricultural commodities struggle whenever the value of the Australian dollar goes up because of mineral prices, an effect known as 'Dutch disease' or the Gregory effect.

For all that, Australia is internationally competitive in both agriculture and mining. No other local industry, with the possible exception of tourism, can claim that. Inhibiting one for the benefit of the other makes no sense whatsoever. Furthermore, the relationship between the two does not need to be a zero-sum game in which one advances at the expense of the other.

Some changes to incentives might help. Mining should, of course, pay full compensation if it degrades the value of farming assets, but farmers and their neighbours also need a reason to welcome miners searching for and finding minerals. Although miners usually pay more than market value when they purchase farms to develop mines, a system of royalties linked to the land might be better. That is certainly how many other countries operate.

But in the end it is not for the government to take the side of agriculture or mining when they are competing for resources. Whether land is used for mining or farming, or they agree to coexist, should be driven by the market within an environment of fair rules. Neither is a protected species.

David Leyonhjelm works in the agribusiness and veterinary markets as principal of Baron Strategic Services, which provides consulting and market information services, and Baron Senior Placements, which provides executive recruitment services.