Don’t be complacent about the Expropriation Act written by TERENCE CORRIGAN

[Nat Quinn]

Don’t be complacent about the Expropriation Act written by TERENCE CORRIGAN

When it was announced towards the end of January that the Expropriation Act had been signed into law, there was well-warranted concern about what this meant for landholding and property rights.

After all, since 2018, the African National Congress and the government it heads (since last year, in a coalition), have been pledging to deal with “the land question”, and this law has frequently been cited as a tool in this regard.

In fact, the ANC’s response to the Act was explicitly expressed in these terms: “a progressive and transformative tool to advance land reform in ways that enable inclusive economic growth and social cohesion.”

Yet after the initial surprise that the Act had silently been assented to, many observers have tried to shrug it off. This includes some within the agriculture and business communities. By this account, the Act is merely about aligning expropriation law with the Constitution, is entirely procedural, and changes nothing. Besides, there are plenty of checks and balances that protect property owners. So, there’s nothing to worry about.

We at the Institute of Race Relations have cautioned against encroachment on property rights for the better part of two decades. This was about tightening the grip of the state, and thus the ruling party, on the economy. This is motivated by ideology – the ANC’s so-called National Democratic Revolution, to which the party regularly recommits itself – and also by pragmatism, since state access to private assets would be a valuable means of patronage.

The Act is not an explicit land reform measure, and its application is far wider. “Property” is not only about land, or even about those assets associated with it, but could extend to things like artworks and pensions funds. But as all farmers would be aware, land and agriculture has featured prominently in providing a justification for this. This was not really because of an often-cited “land hunger” – since there is very little evidence of this, and most of what exists is an urban phenomenon – but because a politically useful narrative has been built around it, a sinister element of which was the stigmatisation of farmers.

So, what does this mean for the farming economy, and why has the IRR continued to raise the alarm?

Firstly, there is the definition of expropriation in the Act. This introduces the legal reasoning of the notorious 2013 Constitutional Court case, Agri South Africa v Minister for Minerals and Energy, into general application. This means in brief that while the state can take property, unless it formally assumes ownership in its own name or transfers ownership to a third party, this need not count as expropriation – and thus nothing at all need be paid. The principle here is “custodianship”, where the state takes an asset class on behalf of South Africa’s people, as it has done with water and mineral resources. Because of its narrow definition of expropriation, the Act does not preclude the custodianship ploy from being used in the future.

Land would be an obvious target for a custodial taking, and such a move has repeatedly been proposed by political leaders and government officials. This could be accomplished by simple legislation, say a hypothetical new “Land Access Act”. Essentially, this would end private property ownership in land; your title deed would be void, and you’d need a permit from the government to farm, on whatever conditions it might impose. The Act would not view this as expropriation, so all of this would be at the cost of the property holder. The prospects for this arrangement to drive corruption and rent-seeking are enormous.

Secondly, while this is not a law allowing blanket and arbitrary dispossession, and while there are some checks and balances built into it, the process for expropriating is weighted against the property holder and in favour of the state. For example, while there are provisions for objecting to offers, and to referring the matter to mediation and to the courts, it appears that an “expropriating authority” can nonetheless still proceed with the expropriation before these processes have been exhausted. Also note that there are no restrictions on the length of time between the service of a notice of expropriation, and the actual taking of ownership – it might happen as soon as a day later, if that is specified in the notice.

Payment, too, is to be made on a mutually agreed date, but if it is delayed – “stuck in the system” – this will not prevent possession of the property from being transferred to the state.

Thirdly, much has been made of the provision for “nil” compensation for particular land expropriations. Understand this correctly. “Nil” compensation is possible in particular circumstances, although contrary to what has been reported, these are not limited to those listed in the Act. The Act introduces the list of nil-compensation conditions with reference to “all relevant circumstances, including but not limited to” (my emphasis). The grounds for “nil” compensation may therefore be far more numerous than the four explicitly mentioned in the Act.

More importantly, the compensation principle is that the amount, manner and time of payment must be “just and equitable”, and this seems geared towards giving the state the opportunity to apply whatever discounts it can. If the “just and equitable” reasoning is applied to pay compensation below market value, this represents a form of EWC as much as “nil” compensation does, in that it takes a part of the value of an asset without payment, to the detriment of the owner.

Note too that land-related issues are likely to be adjudicated before the newly established Land Court. We at the IRR have raised concerns that it appears to be designed to push a particular policy agenda. We shall see how it turns out, but be aware that farmers may find themselves appearing before a bench heavy with activist “experts”, who have a particular political perspective on how things are to be decided and are empowered to employ a lower standard of evidence than applies in a regular court.

Also be aware that this law arises in a particular context. The ANC has been waving the spectre of EWC around for years. As President Ramaphosa memorably put it in 2018: “We are going to take land and when we take land we are going to take it without compensation.” Since those in power have talked this course of action up and not at all distanced themselves from it, we should all be wary that it could become a political imperative; concerns about the economic fall-out from bad policy have after all never featured strongly in government policy thinking.

Unfortunately, many good, well-meaning commentators have not factored these concerns into their analyses. We urge the farming community not to be complacent about the Act and what it represents. It is decisions like the enactment of this legislation that continue to depress South Africa’s economic performance and prospects, as the IRR has long pointed out. We shall continue to oppose the trajectory, arguing for a legislative and policy environment that will promote growth and development. We hope that the farming community will join us in this.

 

SOURCE:Don’t be complacent about the Expropriation Act – Daily Friend

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