Guest Column

Expropriation Bill not a minor issue but a major threat

2019-02-18 09:16
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Once the Expropriation Bill and the constitutional amendment have been adopted, the state could enact a National Land Act which vests all land in state custodianship, writes Anthea Jeffery.

Written comments on the Expropriation Bill are due on Tuesday – and South Africans would be well advised to make their objections loud and clear.

Jeremy Cronin and Thulas Nxesi, both senior leaders in the SACP, claim that the bill is "a very good piece of legislation", which "meticulously follows the spirit and letter" of the Constitution.

Their reassurances are intended to convince people that the "nil" compensation provisions in the bill will apply primarily to expropriated land which has been "abandoned" or is being held "for purely speculative purposes".

In fact, the bill will empower the government to take custodianship of all land without having to pay any compensation at all. This will be achieved under the bill's definition of expropriation, which states that expropriation means the "compulsory acquisition" of property by the state. Most people might think that the compulsory vesting of all land in the state's custodianship falls precisely within this definition. However, this overlooks what Chief Justice Mogoeng Mogoeng ruled in the Agri SA case in 2013.

This case revolved around an unused "old-order" mining right, which had "ceased to exist" under the Mineral and Petroleum Resources Development Act (MPRDA) – because it had not been converted into a "new-order" right in time – and had thus become vested in the custodianship of the state. 

Sebenza (Pty) Ltd – which had paid R1m for the mining right a few years before – demanded compensation from the state for this expropriation. The North Gauteng High Court ruled that all the competencies of ownership had passed from Sebenza to the government, and that it made no difference whether the state's competencies were termed "ownership" or "custodianship". Expropriation had occurred and R750 000 in compensation was payable.

On appeal to the Constitutional Court, however, Mogoeng disagreed. Handing down the majority judgment, he said that expropriation requires the acquisition of ownership and so does not occur on the assumption of custodianship. Hence, no expropriation had taken place. This meant that no compensation was payable to Sebenza, as Section 25 of the Constitution (the property clause) limits the state's obligation to pay compensation to instances where expropriation has occurred.

The bill's definition of expropriation is based on Mogoeng's ruling. It is intended to take a judgment which was clearly limited to the facts of that particular case and turn it into a general principle of law.

This is a momentous change. It will be compounded by the proposed constitutional amendment (yet to be unveiled), which might allow "nil" compensation in "appropriate" circumstances, without specifying what these circumstances would be.

Once the bill and the constitutional amendment have been adopted, the state could enact a National Land Act which vests all land in state custodianship. This is also what the government is planning to do, according to a senior manager in the land reform department, Masiphulo Mbongwa. 

Mbongwa told the World Economic Forum's meeting in Davos last month that the government plans to introduce a National Land Act similar to the National Water Act of 1998 and the MPRDA of 2002.

The National Water Act vests all water resources in the state as public trustee. The MPRDA vests all mineral resources in the state as custodian. A National Land Act along similar lines is thus likely to vest all land in the custodianship of the state.

Once the state has custodianship of all land, "every title deed will be meaningless" (as Julius Malema puts it). However, former owners will not be entitled to any compensation under the bill's restrictive definition of expropriation, and the amended Constitution's endorsement of "nil" compensation in "appropriate" circumstances.

Instead, people will need "land-use licences" from the state, which might initially be set for periods of 25 years (as Malema has mooted). Initially, people will presumably be allowed to keep using the residential, farming, industrial, mining and other land they previously owned. But the state will also have broad powers to terminate these land-use licences, or make them subject to conditions which are increasingly difficult to fulfil. This has already happened in mining.

Mining companies were paid no compensation when the mineral resources that many of them owned became vested in the state's custodianship. Initially, they could obtain their "rights to mine" (i.e. to keep exploiting the minerals they previously owned) on relatively easy terms. Apart from the 26% BEE ownership requirement – itself a major and costly obligation – no other hard targets were set. 

By contrast, under the 2018 Mining Charter, the ownership target has been increased to 30% for new mining rights, and all mining companies must meet rigid and unrealistic targets on employment equity and preferential procurement, in particular. They must also maintain 100% scores on ownership and other targets or risk losing their mining rights. 

Once the state has taken custodianship of all land, similar demands could be placed on enterprises in every sector. Land will become a patronage tool in the hands of the state and could be used by the ruling party to increase revenues from land-use rents, demand compliance with escalating transformation targets, insist on greatly increased densification in well-located suburbs, and shore up its electoral support (by threatening to terminate existing land-use licences in areas that vote against it).

The Expropriation Bill is not a minor issue but a major threat. If all land becomes vested in the custodianship of the state, this will give the ANC an extraordinarily powerful instrument of political and economic control. All South Africans who value their freedom must speak up strongly against the restrictive definition of expropriation in the bill before it is too late. 

- Dr Anthea Jeffery is Head of Policy Research at the IRR, a think tank promoting political and economic freedom. Readers are invited to take a stand with the IRR by SMSing their names to 32823 (SMSes cost R1, Ts and Cs apply).

Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.

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