The new Expropriation Bill: Transformative or troubling?

Expropriations by the state or organs of the state are done on a very regular basis in the public interest in South Africa and other countries, but should the Expropriation Act of 1975 be repealed and replaced by proposed new legislation, it will usher in a new era. 

ANC chief whip Stone Sizani, who resigned on 2 March, said the Bill [B4B-2015] was one of the most important transformative pieces of legislation since 1994.

With the new proposed legislation government intends to speed up land reform.

But concerned interest groups and some opposition parties have pointed out certain serious shortcomings, which mean that its impact could be far more widespread for local and foreign investors.

In fact, DA MP Anchen Dreyer said the Bill’s definition of property was so wide open to interpretation that it could include residential and commercial property, taxi fleets, cattle and other movable property as well as intangible property such as intellectual rights.

According to Phephelaphi Dube, legal officer at the Centre for Constitutional Rights, the current version of the Bill as adopted in the National Assembly is the best version so far.

“That being said, it is worrying that a troubling clause which defines expropriation was included at the last moment [during the Portfolio Committee stage after public hearings had been concluded].”

Dube points out that this definition of expropriation implies that the state or an organ of the state can exproripriate property on behalf of a private individual or a private company.

“There should be no room for property transfers to third parties through expropriation. In South Africa, with its distinct different LSM classes, this will be problematic. The question is who are you to say that you can make better use of someone else’s land or property.”

As compared to the 1975 Act, which only made provision for expropriation in public purpose, the Bill goes a step further by including “public purpose” and “public interest” definitions.

Dube added that the current version of the Bill also opens the door for expropriation of land for people who would like to undertake economic developments, for example low- income housing developments. “In fact, the Bill encourages that.”

Economist Mike Schüssler said in a recent online article that whites as a group were very small in the overall population and were still overrepresented as owner-occupiers, but they certainly were no longer the majority owners and they did not own 80% of South Africa’s land.

In October 1993 Cyril Ramaphosa, former secretary-general of the ANC and South Africa’s current deputy president, said at the Land Redistribution Options Conference in Johannesburg: “The massively unequal distribution of land is not just the unfortunate legacy of apartheid, it is the totally unacceptable continuation of apartheid.”

However, Schüssler points out that new bills are currently being debated on the basis of statistics, which evidence suggests were no longer relevant.

“With about 15.6m households in South Africa at present, and the number of households having grown faster than the population for some time now, it is clear that between 38% and 46% of households live in homes that have been built since 1994.

“Since 1994 the private sector in the bigger municipalities has constructed 1.625m residential buildings and that alone is more than the estimated total number of white households of 1.62m,” Schüssler said.

Asked about the need to replace the existing Expropriation Act, Ben Winks, an associate at the legal company Herbert Smith Freehills South Africa, says the 1975 Act was drafted in the authoritarian apartheid style of giving the government wide discretion to disregard individual rights without giving reasons.

“In fact, it is quite draconian. The Act allows the state to expropriate property without giving any warning or justification. It severely limits oversight by the courts regarding appropriate compensation, by giving the landowner only six months to approach a court, at their own cost, to challenge the amount offered by the state. In these respects (among others), the current Act is clearly unconstitutional and is long overdue for replacement.”

According to Winks the new Bill was a dramatic improvement on the Act in almost all respects.

Most significantly, it requires that the state must first exhaust efforts to purchase the property on reasonable terms in the open market, before it can even consider expropriating it.

Says Winks: “This layer of protection for property rights is remarkable, even in comparison to Canada, Australia and other free-market economies.

“Importantly, the Bill also requires that the state must give the landowner prior notice and detailed reasons for expropriating a particular property, as well as an opportunity to submit objections.

“This is consistent with the constitutional right to procedurally fair administrative action. The stated purpose of the Bill is to create a uniform and fair procedure for all expropriations under several separate pieces of legislation.”

This is an excerpt from an article that originally appeared in the 10 March 2016 edition of finweek. Buy and download the magazine here

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