New expropriation bill narrows the focus for no compensation

But continues a long-standing disrespect for property rights in South Africa

By Ciaran Ryan

Private Property - DearSA

The expropriation without compensation (EWC) debate refuses to die. In 2018, when EWC first entered public debate, the idea was to amend Section 25 of the Constitution which protects South Africans against arbitrary deprivation of property.

Section 25 has been an impediment to those pushing for Expropriation without compensation, but to amend it would require a 75% – or two-thirds – majority in Parliament, depending on which legal advisor you talk to.

The new Expropriation Bill introduced early in October 2020 will replace the 1975 Expropriation Act, and should have an easier passage through Parliament, requiring a majority of just 50% plus one.

However, it still has to go through the public comment stage, which so far has been stridently against any tampering with property rights. So this is your chance to make your voice heard.

Expropriation has been a feature of SA’s legal landscape since the apartheid years, but compensation was always part of the equation (and since 1994, protected by the Constitution).

The new Expropriation Bill will allow Expropriation without compensation when it is in the public interest or for “public purpose”.

The introduction of this new bill does not mean amendment of Section 25 of the Constitution has been buried despite there being very little public support for it (and what support there is, is getting smaller, as the Dear South Africa campaigns demonstrate).

If you’re looking for reasons behind rising capital flight and emigration, Martin van Staden, legal researcher at the Free Market Foundation, reckons he has found the answer: “Even discussing EWC has triggered capital flight,” he says. “This shows up in the Fraser Economic Freedom of the World 2020 report, where there is declining trust in SA’s property rights.”

Going down the EWC road puts us in company with the likes of Zimbabwe and Venezuela, says van Staden, with all that implies: rising emigration, currency debasement and economic collapse. The emigrants are those with the skills and the money.

Those in favour of EWC point to the disproportionate amount of land still in white hands and the lack of restitution for apartheid- and colonial-era land grabs. Despite many surveys attempting to quantify this disparity, there remains doubt as to the actual state of land ownership. Nor do we have much idea of what land is owned by the state, much of which could be made available for distribution to the poor. 

EWC has become a racial profiling exercise influenced by political agendas, and that has made it potentially poisonous. Owning 10,000 hectares in the Karoo, compared to five hectares in Stellenbosch, means very little unless we start to look at the economic usefulness of the land.

Van Staden believes the government may be getting ahead of itself in trying to pass the new Expropriation Bill without first amending Section 25 of the Constitution. Any attempt to expropriate property without compensation is sure to end up in the Constitutional Court. 

Should the bill get passed into law, the government may simply not enforce it, a way of sterilising its own legislative decisions. But should it enforce it, our descent to a failed state will be virtually assured. Either way, foreign investors – who suspect a government capable of taking land without paying for it might also do the same to other assets – will avoid South Africa, even more so than is currently the case.

The new Expropriation Bill proposes leaving it to the courts to decide on the level of compensation in the case of Expropriation, but defines the following circumstances where nil compensation will be paid:

  • Where land is unused, and the owner has no intention of developing or using it to generate income, but to hold it for capital appreciation;
  • State-owned land acquired for “no consideration” that is not being used for its core functions, nor likely to be used for these functions in future;
  • Where the owner has abandoned the land and exercises no control over it, despite possession of a title deed;
  • Where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land; 
  • When the nature or condition of the property poses a health, safety or physical risk to persons or other property;
  • Should a court or arbitrator determine that an amount of compensation in terms of section 23 of the Land Reform (Labour Tenants) Act, “it may be just and equitable for nil compensation to be paid, having regard to all relevant circumstances.”

Public Works and Infrastructure Minister Patricia de Lille explained the new bill had passed Constitutional muster with the Chief State Law Advisor, while the previous Expropriation Act was inconsistent with the Constitution.

Van Staden says one of his chief concerns with the new bill is that it treats government and citizens differently, and that could further eviscerate the rule of law in SA. It follows a long-standing pattern of disrespect for property rights dating back to apartheid and pre-apartheid years. 

Make sure to have your say on the new Expropriation Bill.