The Bill covers far more than land, it covers homes, pensions, business premises, mining rights, shares, and unit trusts – all of which will fall within the Bill’s definition of ‘property’ – and all of which will be vulnerable to expropriation for ‘nil’ or inadequate compensation.
25 March 2021
South Africa’s land reform problems stem largely from inefficiency, corruption, and an absence of secure ownership, and the Expropriation Bill now before Parliament will not provide solutions.
So said the IRR’s head of policy research, Dr Anthea Jeffery, in a presentation on the Bill to the portfolio committee on public works and infrastructure.
Moreover, she said, the Bill covered far more than land, as was commonly thought. “Instead,” she said, “it covers homes, pensions, business premises, mining rights, shares, and unit trusts – all of which will fall within the Bill’s definition of ‘property’ – and all of which will be vulnerable to expropriation for ‘nil’ or inadequate compensation.”
Contrary to government reassurances, the Bill was thus not limited to land reform, she said. “Nor will it solve land reform problems, which stem largely from inefficiency, corruption, and an absence of secure ownership.”
Instead, the Bill would threaten the property rights of all South Africans: from the 9.8 million people with home ownership (7.8 million of whom are black) to the roughly 18 million individuals with customary law plots, and the estimated 17 million people who belong to pension funds. It would also harm all business owners, both large and small.
“At the same time,” said Jeffery, “the economic fall-out from the Bill will further hurt the 11 million individuals now unemployed by reducing investment, limiting growth, and stalling any post-lockdown recovery.”
Under the Bill, ‘nil’ compensation may be paid for expropriated land in at least five listed circumstances. For example, no compensation may be paid to owners who have lost control to land invaders or building hijackers. But this provision was sure to encourage illegal conduct of this kind and greatly weaken the rule of law.
In addition, the circumstances in which ‘nil’ compensation may be paid were expressly ‘not limited’ to the five set out in the Bill – so no one could tell how much more widely ‘nil’ compensation may in time extend.
Jeffery warned that the Bill’s procedures for expropriation were heavily skewed in favour of the state. While the preliminary steps that ‘expropriating authorities’ must take were fair, said Jeffery, the procedures on subsequent expropriation were thoroughly “unreasonable”.
The Bill still empowered hundreds of state entities, once they had completed these preliminary steps, to serve the owner with a notice of expropriation. Under that notice, both the ownership and the right to possess the property would automatically pass to the expropriating authority on specified dates. Those dates could be set very soon: within a week or fortnight of the notice being received.
In theory, expropriated earners could contest the validity of the expropriation and the amount of compensation offered in the courts. In practice, however, people who were already reeling from the sudden loss of their homes, business premises, or other assets would generally find it too costly and difficult to litigate.
They would also bear the onus of proving that the compensation offered, for example, was not enough – and would have to pay much of the expropriating authority’s legal costs, in addition to their own, if they failed to convince the presiding magistrate or judge of this.
What was needed instead was for the expropriating authority to obtain a court order confirming that its proposed expropriation was fully in keeping with the Constitution before it issued a notice of expropriation.
Said Jeffery: “The Bill acknowledges that a prior court order is needed before inspectors can enter onto property to investigate its suitability for expropriation; that such an order is needed for all but the most urgent temporary expropriations; and that a prior court order is also required to extend a temporary expropriation from 12 to 18 months.
“But when it comes to the far more serious matter of a permanent expropriation, the bill excludes the need for a prior court order – and this is clearly unconstitutional.”
Jeffrey reminded the portfolio committee that the IRR had drafted an alternative expropriation bill that would rectify the defects in the current measure. This alternative bill was intended to assist the committee in making the necessary changes.
Said Jeffery: “Three core amendments are particularly required. First, the bill must make it clear that a prior court order – which confirms the validity of the expropriation and decides on the just and equitable compensation to be paid –must be obtained before a disputed expropriation can proceed.
“Second, the bill must require that the full amount of compensation be paid prior to the transfer of ownership to the state. And third, the compensation payable must include damages for all losses resulting from the expropriation. Such damages would include moving costs, any loss of income, and any outstanding balance on a mortgage bond which the compensation paid would otherwise not be enough to cover.”
Added Jeffery: “South Africa needs new expropriation legislation that is fully compliant with the Constitution, but the current Bill does not meet that test. The IRR’s alternative bill, by contrast, will bring the Bill into line with the Constitution, with international best practice, and with the economic imperative to increase prosperity for all.”