DA's response to the Draft Green Paper on Land Reform, September 12 2011

1. Introduction

The arrival of the Green Paper on Land Reform has been a very long time coming. It is a testament to the importance of this document to the affected stakeholders in the areas of rural development and land reform that so many leaked copies of draft versions have been in circulation over the past year - long before the final version we have before us was finally tabled by Minister Nkwinti for public comment late last month.

These leaked copies of the draft document are also a strong indication that the document which was workshopped over the past few months through the government was a far more substantial offering than that which has been tabled by the Minister (the last leaked version of the Green Paper on Rural Development and Land Reform coming in at 127 pages).

Nevertheless, the DA today offers its analysis on the Land Reform document which has at last been tabled by the Minister. We will highlight those provisions of the draft policy which are of concern to us, and offer a series of solutions to this all-important aspect of the rural economy.

2. A Vision for Land Reform in South Africa

It is clear from the brief, 11-page policy offering which has been tabled by the Minister that the ANC government is not confident in its own vision for land reform in South Africa - if indeed it actually has one. Instead, we are offered a glimpse into the ANC's priorities in respect of land reform - its conference resolutions at Polokwane, a rearticulation of the Department's existing strategy for both rural development and land reform, and a misdiagnosis of the problems surrounding corrective action in the rural economy, which focuses exclusively on the colonial and apartheid past, while giving no attention to the failures of successive ANC administrations after 17 years in government.

The DA's own vision for land reform in South Africa is based on the four pillars of the Open, Opportunity Society for All: Redress, Reconciliation, Divesity, and Delivery. It is a vision of a thriving rural economy in which the injustices of South Africa's apartheid and colonial past are effectively and decisively redressed through a combination of sustained job-creating economic growth, and a well-managed and appropriately resourced restitution and redistribution programme.

There is no question that South Africa needs an effective, well-implemented land reform programme. It is a moral imperative that the injustices created by the 1913 Land Act - which decreed that only certain parts of the country (a mere 7% of the total land mass) could be owned by black South Africans; forced millions of people off the land and deprived them of their means of survival - be effectively redressed.

In addition to the Land Act, apartheid's compounding crime - Bantu Education - deliberately deprived black South Africans of the ability to acquire the education and skills with which to gain a foothold in the industrialising economy. We live with the consequences of this history today - both in our urban and rural economies - and it is essential that we address them.

The DA believes that any programme of redress must be based on the rule of law and the constitutional provisions that govern property ownership; only then can land reform be a "win-win" scenario, in which the rights of present and future landowners are protected.

Our approach to land reform has always been about the creation of genuine, broad-based opportunity, coupled with the expansion and diversification of South Africa's commercial agriculture sector to increase productivity, create more rural jobs and promote food security. What this requires is an energetic and focused government that is willing and able to perform its own functions effectively, while at the same time creating economic conditions that are conducive to sustained growth, attract investment, and create jobs in order, ultimately, to eradicate the grinding poverty gripping the majority of our rural communities.

3.Current Challenges and Weaknesses

The Green Paper on Land Reform places almost none of the responsibility for the current challenges facing South Africa's failing land reform programme at the door of the National Government. Instead, it focuses almost entirely on the faults of our history, as well as attempting to argue that the current economic environment and property ownership systems are also to blame for the state's failure to implement an effective programme of land reform.

Appallingly, the introduction to the document even goes so far as to equate these challenges to a battle between black and white South Africans, while making thinly veiled threats on behalf of the former:

"The Truth & Reconciliation Commission (the TRC) has adequately demonstrated the capacity and political will of black people, in general, and the African majority in particular, to forgive. BUT, this goodwill should not be taken for granted, because it is not an inexhaustible social asset." [p. 3]

It is true that land reform in South Africa is failing. But the main cause of this failure is to be found in the present: poor ANC government policy and a management and implementation process which is all but crippled by corruption, poor planning, and financial mismanagement.

The Green Paper acknowledges none of these challenges even though they have been publicly highlighted on many occasions by the Auditor-General, the Department of Rural Development and Land Reform, and the Minister himself. Even President Zuma, who saw fit to initiate a Special Investigating Unit (SIU) probe into the functioning of the Department, has acknowledged the extent of the crisis.

1. The Department received yet another qualified audit from the Auditor-General (AG) in the 2009/2010 financial year, with the AG citing once again its failure to conduct the all-important audit of state-owned land which will enable it to reach a conclusive understanding of just how much state land is available to it for land reform purposes. For fifteen years, we have been subjected to excuse after excuse for the government's failure to conduct an audit of state-owned land and get its house in order. All the while, the Department continues to engage in the process of aggressively acquiring land for reform purposes under the auspices of the Proactive Land Acquisition Scheme (PLAS), without knowing how much land is in its own possession.

2. In addition to the Department's failure to complete the state land audit, the Auditor-General noted the following additional financial irregularities:

• R53 million lost to the Department through fraudulent activities
• Outstanding claims against the Department amounting to R566 million
• Irregular expenditure amounting to R4.177 million
• Fruitless and wasteful expenditure amounting to R3.2 million; and
• R420-million worth of outstanding payments to land claimants

3. Last year, Minister Nkwinti admitted that 90% of the 5.9 million hectares of land acquired by the state for emerging farmers is not productive. As a consequence of this, one quarter of the R900 million budget for restitution had to be diverted to the recapitalisation programme in the last financial year. According to the Minister, "To date, 852 distressed farms across the country have been advertised for expressions of interest by either mentors or strategic partners interested in making them commercially viable and productive..."

The government cannot begin to address the issue of land reform without acknowledging where the current implementation challenges in its own department lie.

4.The four-tier land ownership system

The Green Paper proposes the creation of a four-tier land tenure framework integrating multiple forms of land ownership:

a. State and public land: leasehold;

b. Privately owned land: freehold, with limited extent;

c. Land owned by foreign nationals: freehold, but precarious tenure, with obligations and conditions to comply with; and

d. Communally owned land: communal tenure, with institutionalised use rights.

The document is scant on details relating to how the four-tier framework is to be implemented and what the different categories of land tenure will entail. Nevertheless, the DA is of the view that the differentiation of varying types of land tenure is necessary and indeed helpful for the drafting of policy relating to each.

State and public land

Any policy relating to state and public land cannot be implemented until an audit of all state-owned land has taken place. There has been a decided lack of political will from the Department of Rural Development and Land Reform to complete an audit of all land owned by the state. The Department has received successive qualified audits from the Auditor-General for, amongst others, its failure to complete this audit.

One way in which the Department can speed up this crucial process is to implement the project in partnership with the Department of Public Works (DPW). In terms of the State Land Disposal Act, the Department of Public Works (DPW) is the custodian of all immovable assets vested in the national government. These responsibilities include their acquisition, management and operation, maintenance and disposal. These two departments cannot operate in silos and must partner in order to finalise the state land audit as a matter of urgency.

It is imperative that the state knows exactly how much land it owns, where it is and in what condition it is - this would aid the government greatly in its implementation of land reform, as it would then be able to ascertain how much land is available to it for land reform purposes.

Last month, the DA wrote to Minister Nkwinti, calling on him to place a moratorium on the government's Proactive Land Acquisition Scheme (PLAS) until such time as the Department has completed the state land audit, as mandated by the Auditor-General. The Department cannot continue to spend public money acquiring land when it does not know how much it already owns, and its ability to manage existing parcels of land is in a state of paralysis.

Land ownership by foreign nationals

It is to be welcomed that the government has abandoned plans to prevent foreign nationals from owning land in South Africa, and now proposes that foreigners enjoy freehold title but with ' obligations and conditions'. Nevertheless, the Green Paper still lacks a research-based motivation for the government's decision to single out foreign nationals for ownership limitations.

The DA is of the view that the purchase of South African land by non-citizens is not significant enough to warrant policy interventions. According to a study commissioned by the former Minister of Land Affairs, Thoko Didiza in 2004, the ownership of land by foreigners did not exceed 3%. And according to a recent reply to parliamentary question, the Minsiter of Rural Development and Land Reform estimated that less than 1% of South African land is currently owned by foreign nationals. There is therefore no justification for any proposals to place limitations on foreign ownership.

Foreign investment in general contributes significantly to the South African economy and results in job creation. Proposals such as this, which could negatively affect investor confidence in South Africa, should therefore be approached with caution.

Communally owned land

In March 2010, four communities occupying communal land in Mpumalanga, Limpopo and the North West Province approached the Constitutional Court in an effort to have the Communal Land Rights Act (CLARA) declared unconstitutional on the grounds that it undermined the security of tenure of those living on communal land and that it had been enacted in a procedurally incorrect manner. (CLARA had been enacted in accordance with section 75 of the Constitution - the procedure for "Bills not affecting the provinces" - and not section 76, which lays out the procedural requirements for Bills affecting provinces.)

In May 2010 CLARA was declared unconstitutional. The court found that the manner in which the legislation had been passed was incorrect as it did indeed fundamentally affect the interests of provinces as it replaced the indigenous law that regulates land occupation, use and administration in the different provinces.

The court declared CLARA to be invalid in its entirety due to the procedural anomaly, thus rendering it unnecessary to consider whether the substance of the Act was unconstitutional. In response, the Minister of Rural Development and Land Reform informed the court that CLARA was inconsistent with government policy and would be repealed. 

With regard to communal land ownership, the government notes in the Green Paper that, because of the complexity of communal land tenure and the recent nullification of the Communal Land Rights Act (CLARA) by the Constitutional Court, its policy in this regard will be ‘treated in a separate policy articulation' and suggests that the communal tenure will be according to ‘institutionalised use rights'.

We are disappointed that the government has failed to deal with this crucial matter in the Green Paper, especially given that the Constitutional Court judgment was handed down over a year ago now.

Although the repeal of CLARA hinged upon a legal technicality, the judgment is nevertheless clear about the substantive matters which must be dealt with in dealing with communally owned land. Chief Justice Sandile Ngcobo emphasised that the Constitution obliges the state to see to the "restoration of land to people and communities that were dispossessed of land by colonial and apartheid laws", and that "people and communities whose tenure of land is legally insecure as a result of racially discriminatory colonial and apartheid laws [must] be provided with legally secure tenure or comparable redress."

The need for access to secure land tenure in the form of individual freehold title has been further motivated for by a number of stakeholder organisations, including the Free Market Foundation (FMF):

"By far, the biggest and best prospect for land redistribution is from government. Government is the primary owner of land in historically black areas ("homelands", "townships", "[informal] settlements"); land that can be immediately redistributed to existing occupiers at virtually no cost ... In other words, redistribution from government, at virtually no cost, could result in millions of black land owners, with billions of rands of capital released into the hands of existing occupiers and unleashed into the economy where it can traded, mortgaged, let and developed."

The Green Paper also fails to deal with the question of Communal Property Associations, established in terms of 1996 legislation with the aim of "... enabl[ing] communities to form juristic persons, to be known as communal property associations in order to acquire, hold and manage property on a basis agreed to by members of a community in terms of a written constitution; and to provide for matters connected therewith."

Since 1996, about 1 500 communal property associations, provisional associations and similar entities have been registered with the Department of Rural Development and Land Reform. The Communal Property Associations Act (CPA Act) imposes a variety of obligations on the Director General and the Minister - including the duty to monitor CPAs and report to Parliament annually to present progress reports.

The first CPA annual report since 1996 was tabled this month in Parliament. The Director-General confessed to the Portfolio Committee on Rural Development and Land Reform that the Department has failed to fulfill the duties imposed by the CPA Act on the Department.

Before the transfer of land ownership takes place, the process of properly surveying communally owned land as part of the comprehensive state-owned land audit must be completed.

In order to enable efficient and equitable service delivery on communal land under traditional authority, the rates collection system that applies in municipal areas should be applied in these areas as well, so that the entire country is covered by a simple and uniform rates collection system. Currently, this system is not applied to communally held land. This new system would require that these areas be demarcated as municipalities and co-opted into and governed by the Municipal Systems Act.

The transfer of land to municipalities would not only ensure effective service delivery and development to these areas, but effectively bring them within the state system instead of under autonomous authorities.

In order to ensure the security of tenure of those currently living in the former homelands, a formal registration process of individual deed titles of land and buildings in these areas must begin. This process must devolve according to the guidelines set out in the Deeds Registry Act regarding the process to be used in proving title without a formal deed. The burden of proof of ownership will be placed on those applying.

Lastly, in order to ensure the continued success of the citizens granted full individual title, the government must institute and oversee an effective programme of post-settlement support, offering beneficiaries economic and agricultural support in the form of resource and advisory services.

The role of traditional authorities should of course not be completely eradicated. However, the DA believes that the substance of this role needs to be revisited in order to ensure that the existence of traditional authority does not deprive South Africa's citizens of their economic and property rights.

5.The Green Paper's proposed bureaucratic interventions

The Green Paper proposes the establishment of a number of new layers of bureaucracy over and above - and in many cases replicating - the work already done by the Department of Rural Development and Land Reform. This begs the question whether the Department should exist at all, given that government policy seeks to devolve so many of its functions to various committees.

In addition, a number of the proposed functions of these committees do not seem likely to pass constitutional muster, since they seek to vest some of the functions of the judiciary in a politically appointed body which is accountable to a member of the Executive.

The DA is also concerned about the potential cost to a relatively small Department such as this one - with a budget of only R8 billion - of establishing an entirely new layer of bureaucracy when there are so many crucial existing programmes in which it has failed to execute its mandate effectively.

Land Management Commission

The Draft Green Paper proposes the creation of a Land Management Commission (LMC) which will be: ‘...autonomous, but not independent, of the Ministry and Department. It will be accountable to the Ministry through the Department...'

The functions of the LMC will be, amongst others: the issuing of advisory opinions and research documentation to the department, and ensuring that land is managed in a manner that will protect its quality and value.

The LMC is to be allocated wide-ranging discretionary powers to:

•  Subpoena anyone and any entity, private or public, to appear before it, and answer any question relating to its landholding or land interest
• Verify and/or validate/invalidate individual or corporate title deeds
• Grant amnesty and/or initiate prosecution, whichever the case might be, at its own discretion,
• Seize or confiscate land obtained through fraudulent or corrupt means.

It is commendable that the Department seeks to create a division that will be directly responsible for researching land policy and monitoring, presumably, land transferred to land beneficiaries. This is quite necessary and may ensure that the current 90% failure rate of land transferred to land beneficiaries is managed in such a way that its productivity is ensured.

However, the powers that the Draft Green Paper suggests be granted to the LMC, an extra-judicial body that is not independent from a political office, are too wide, and possibly unconstitutional. The powers to subpoena, award amnesty and invalidate land ownership are the functions of the judiciary and cannot be granted to an entity that reports to the executive.

It is of particular concern that it would even be suggested that the power to validate and invalidate land ownership be granted to an extra-judicial body as this would effectively mean that the LMC could terminate land ownership rights without having to refer to the courts.

The Constitution's Section 25 property clause explicitly provides that, "... no one may be deprived of property except in terms of a law of general application" and property may only be expropriated "... subject to compensation, the amount of which and the time and manner of payment of which have been agreed by those affected or approved by a court."

The property clause does not make provision for extra-judicial bodies to unilaterally issue expropriation orders without either agreement between parties, or the approval of the courts.

The Land Valuer - General (LVG)

The Draft Green Paper proposes the creation of a statutory body, the Land Valuer-General (LVG), which would perform the function of determining financial compensation in cases of land expropriation under the Expropriation Act or any other policy, or in compliance with the Constitution.

This is yet another provision that does not seem likely to pass Constitutional muster. The Constitution explicitly provides that the role of determining financial compensation falls to the judiciary. Appointing a non-independent body to determine compensation will open the process of awarding compensation to abuse. The willing-buyer-willing-seller principle supported by the Constitution must be adhered to.

The Department of Rural Development has consistently used the ‘willing-buyer-willing-seller' model as a scapegoat for its failure to meet land reform targets. The DA believes that this is an attempt to deflect attention away from the government's inability to manage an effective and efficient land reform programme using legally sound and sustainable measures.

Thus far, the pace of land reform in South Africa has been severely hampered by inefficient management and a lack of financial commitment on the part of the state. Increasingly, populist elements within the governing party have been blaming the slow progress of land reform on what they deem to be "market failures". There have been increased calls for the state to expropriate land and to abandon the willing-buyer-willing-seller principle, which has underpinned the land reform programme until now.

Research shows that a market-oriented approach, and in particular the retention of the willing-buyer-willing-seller principle, is essential to a successful and sustainable land reform programme. This is because a market-based land distribution model lowers transaction and land prices while efficiently distributing land.

The DA believes that expropriations, where they can be justified in terms of the Bill of Rights, should only be used as a last resort and only when no other suitable land is available. Where expropriations do occur, the Constitution is clear that compensation must be "just and equitable" and based on, among other factors, "the market value of the property". Compensation must also take into account the value of any improvements on the land.

The onus lies squarely on the state to prove that the compensation offered to landowners reflects the true market value of their property. As such, the Department must take responsibility for ensuring that it has within its ranks the expertise to appraise the market values of agricultural land.

The Constitution makes it explicitly clear that the burden of carrying the cost of land reform resides with the state and not the individual land owner; as such, individuals should not be forced to accept less than market-related compensation.

6. International Benchmarking

The Green Paper makes reference to land reform experiences elsewhere in the developing world - in particular, China, India, Mexico and Egypt.

These are some of the challenges these markets have faced in respect of implementing effective land reform programmes:

China

The Green Paper refers to China's Commune System (implemented since the 1950s after a bloody agrarian reform that left hundreds of thousands of land owners dead) as an example. This system is generally regarded as a failure, especially with respect to production output. Property rights were centrally controlled by People's Communes. The policy was revised in 1962, creating a three-tier system, with collective ownership property rights firmly vested with the production tier.

During the 1970s a new system was proposed as the Commune System remained a failure. China re-introduced the Household Responsibility System - a system in which local managers are held responsible for the profits and losses of the enterprise. Initially the system was extremely successful. However, the period of success was followed by relative stagnation, due to a system of periodic redistribution that promoted over-exploitation, rather than capital investment into future productivity. Land use rights were returned to individuals; however, collective land rights were left undefined following the disbandment of the communes.

China is currently (since 1998) debating a Property Law - proposed national legislation that will define land ownership in China for many years to come. The law forms the basis of a freehold, rather than a private ownership system.

India

It is important to note that India does not have a national land reform program; since independence, land reform has been voluntary and state-initiated. Land reform took place in states that brought leftist parties to power; most notably in Kerala and West Bengal, where the Communist Party of India made electoral promises on land reform. This kept them in power from 1977 to 2011.

Operation Barga bestowed on sharecroppers protection against eviction by land owners, and rights to a shared produce. The programme was relatively successful in the protection and upliftment of share-croppers, though it is thought that the programme stimulated increasing poverty amongst other sections of society. It created small and segregated land-holding patterns, and a failure in developing agri-industrial markets for produce. In India, with the exception of West Bengal, land reform has generally not been successful.

Mexico

It is important to note that peasants were allowed to raise capital on their land. Today, most peasants are land owners, although holdings are very small scale, and many farmers have to supplement their income elsewhere.

Egypt

Land reform only resulted in the redistribution of around 15% of land in Egypt. Land reform programmes came to a halt due to massive urbanization, and the land reform programme was eventually abolished.

7. Conclusion

Land reform in South Africa can be a "win-win" scenario, in which the injustices of the past are redressed, while at the same time growing the rural economy, creating jobs, and ensuring access to opportunity for all South Africans.

In order to achieve these aims, the overarching objective of any government responsible for answering the land question must be to drive rural economic growth and job creation. This cannot and will never be achieved by the expropriation of land without compensation. Nor will spreading fear and xenophobia by demonising foreign investors in South Africa as "thieves" solve the problems of joblessness, hunger and poverty plaguing our nation.

Instead of vilifying property rights, the government can and should expand access to them in order to empower landless South Africans economically and redress the imbalances of the past.

With the requisite time, effort, funding and planning, the government can put into place measures and progammes of action to effect land reform in an economically viable and sustainable way. This Green Paper, however, does not come close to addressing the myriad issues which affect this policy area. The Minister needs to return to the drawing board and draft a policy document which details a comprehensive and substantive plan for land reform in South Africa.

Issued by the Democratic Alliance, September 12 2011

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