The South African Institute of Race Relations today called on the government to withdraw the current Expropriation Bill (the bill) from Parliament and instead to bring the Expropriation Act of 1975 into line with the Constitution through two simple amendments to the existing statute.
Though the ostensible purpose of the current bill is to speed up land reform, the Institute noted that the main obstacle to successful land redistribution is not the willing seller/willing buyer principle the bill seeks to circumvent. Rather, it is a lack of capacity within the Department of Land Affairs. In addition, half of the land reform projects implemented to date have failed, largely because the government has omitted to provide adequate support to emergent farmers. If land redistribution is speeded up via expropriation - rather than by addressing these key obstacles - the result (as the director general of land affairs, Mr Tozi Gwanya, has recently warned) will be ‘more assets dying in the hands of the poor'. Rural destitution may deepen, while the food security of all South Africans may be put at risk.
The Expropriation Bill is thus more a hindrance than a help to successful land reform. In addition, the bill governs not only land and other immovable property but also ‘rights in property' and movable property, without exception. It thus paves the way for any organ of state, at any level of government, to expropriate livestock and farming implements, residential homes, business premises and equipment, patents, and shares whenever it considers this to be in the public interest.
The bill empowers the state to take ownership and possession of any such property simply by giving notice to the expropriated owner. Though compensation will thereafter be payable, this is likely to be less than market value or loss suffered. The state will make the ‘final' determination of the compensation due, subject only to a limited form of court review. Since no compensation may be payable while such review is pending - and ownership and possession will generally already have passed to the state - only people with deep pockets may be able to contest the state's decisions on compensation.
The bill is a draconian measure giving all state agencies, from municipalities upwards, the power to take from farmers, firms, and ordinary people their most valuable assets - often their only assets, built up over a lifetime of endeavour. In return, expropriated owners will receive less than market value and additional loss suffered. No matter how sparingly the government may now intend to use the measure, once it has been put on to the Statute Book there will be little to limit state agencies from resorting to it ever more often. The mere risk of this will be enough unsettle the property rights of all South Africans. This in turn will deter investment, undermine already faltering growth, and make it harder still to overcome poverty and inequality, the Institute cautioned.
By contrast, said the Institute, the current Expropriation Act of 1975 strikes a more just and equitable balance between the rights of the state and the expropriated owner. Under the act, the minister of public works may expropriate property for public purposes, but only against payment of compensation based on market value, damages for loss suffered, and a further percentage as a solatium (solace). Though ownership and possession pass to the state on the dates specified in the expropriation notice, at least 80% of this compensation must be paid when the government takes possession. Interest on the outstanding balance is also payable, while disputes can be taken to before the courts which have untrammeled jurisdiction to order the payment of fair compensation.
However, the current Expropriation Act is also out of sync with the Constitution because it does not allow expropriation in the public interest and does not mention four of the factors relevant to compensation listed in section 25 (the property clause) of the Bill of Rights. However, these defects can readily be corrected.
There is no need, the Institute stressed, to adopt the current wide-sweeping bill in order to bring the Expropriation Act into line with the Constitution. Rather, the current Expropriation Act can be amended by the addition of two simple clauses.
The first clause would give the minister of public works the power to expropriate not only for public purposes but also in the public interest (the criterion the Constitution lays down).
The second clause would add to the act's list of factors relevant to compensation the four ‘missing' factors from the property clause of the Constitution. These four factors are: the current use of the property, the history of its acquisition, any state subsidy in its acquisition or improvement, and the purpose of the expropriation.
Compensation would then be based these four factors, together with market value, loss suffered, and an additional solatium. This would bring the act fully into line with the Constitution. Since the list in the property clause is expressly not a closed one, there is no reason why factors highly relevant to just and equitable compensation - damages for loss suffered and an additional solatium - should be excluded.
The deadline for submissions on the current Expropriation Bill is 16th May 2008 and the bill, according to the current legislative schedule, is to be adopted by Parliament by 30th June 2008. The Institute has today made a submission to the portfolio committee on public works urging that the current bill be scrapped and that these simple additions to the Expropriation Act should instead be made.
Statement issued by the South African Institute of Race Relations May 15 2008
