Most significant transportation projects require land acquisition, and even those that don’t may have impacts on nearby properties and those who live in them. The Torrens to Darlington project is no exception, despite the use of tunnels, which don’t save nearly as many properties as the government claimed they would. Yet these impacts should not prevent us building and improving roads, because in the long run they benefit the entire city. But we should give serious consideration to how we manage these impacts, and how we treat those who are impacted in a way that is just and fair, and even beneficial to them.

Property acquisition, both voluntary and compulsory, has always been a part of road construction, yet it was only relatively recently that some significant improvements were made to the property acquisition process here in SA. Among the improvements is a “solatium payment”, which is an additional amount given to homeowners to compensate them for displacement from their homes, in addition to the actual value of the home. However, while this amount is nominally 10% of the property’s value, there are some important caveats. Firstly, the legislation caps the payment at $50,000, which practically means that, in today’s inflated housing market, very few homeowners will actually get 10% of the value of their property as a solatium payment (for the T2D project, it would be close to none). Secondly, this payment is only given to home owner-occupiers. Those who are renting their property out are not eligible, and business properties are also not eligible.

I think there is an important principle that justifies solatium payments generally: the principle that an involuntary sale should entitle the owner to greater compensation than a voluntary one. If your property is taken from you, you should get more than if you had sold it voluntarily on the property market. This extra money is the payment for being forced out. How much should this be? It depends on how much time the owners are given (and there may be other factors to consider, too).

I think a good guiding principle is this: how much would you need to offer to get more than 50% of property owners to sell voluntarily within the given time period, assuming it was a time limited, take it or leave it offer? That is how much property owners should be given. Of course, it’s impossible or at least very difficult to know exactly what this figure is on a project-by-project basis, but with some research we should be able to come up with guiding percentage figures that can be enshrined in legislation and applied to all projects going forward.

Another way of looking at it is this: If a property owner were to ask “what’s in it for me?”, the only part that’s “in it for them”, so to speak, is the amount left over after subtracting the property’s value and cost of relocating. You can’t expect them to be happy if you don’t give them anything extra. To be frank, I think 10% is a good start, but it’s just a start. And as I said above, most property owners are getting nowhere near 10%.

How much more would it cost the government to give property owners a 15% solatium payment? Only 4.5% more than it costs to give them a 10% payment, and only 15% more than it would cost to give them no solatium payment at all. And that’s if you count only the property value itself – if you also factor in relocation costs, especially for businesses, these percentage figures would be lower. And given that property acquisition is a small fraction of the total cost of the project, this additional solatium payment would not impact project costs significantly.

Think of it this way: with a 15% solatium payment, the government only pays 4.5% more to make the deal 50% better for property owners (because the amount that’s “in it for them” would be 50% greater than what they would get with a 10% solatium payment). Or, a 20% solatium payment would make the deal twice as good for property owners while only costing the government an additional 9%. This is obviously well worth doing when you consider the headaches that governments can go through when dealing with disgruntled property owners who feel that they haven’t been treated fairly. These problems can derail entire projects, or result in costly design changes, when the problem could have been solved with just a little bit more generosity towards landowners.

I think a solatium payment somewhere between 15% and 20% should be the minimum baseline for compulsory acquisition, especially if the time given is less than two years. This should apply to all properties, regardless of use and regardless of value, with no cap on the amount, and it should be enshrined in legislation. The government needs to win back the trust of the people, so that it can carry out future projects with fewer impediments.

What we currently have instead is a system that benefits no one except the construction contractors, due to the government choosing to build enormously expensive infrastructure to avoid acquiring a couple of hundred properties, and burdening us with an inferior motorway in the process.

These changes might also encourage the government to do what they should have done all along, which is purchase properties on the voluntary market many years in advance of anticipated projects, so that the number of compulsory acquisitions can be minimised.

There are other things to consider too, such as compensation for renters who have been there for a long time, which I may address in a future post.