“The threat to property rights is ongoing” - Biznews

16 April 2021 - For more than a decade the Institute of Race Relations has fought a dogged defence of property rights in South Africa.

“A mans home is his castle”, goes the old proverb. While the surface meaning is to respect someone’s home, there is a deeper meaning that encapsulates the importance of privacy and property rights. In South Africa, these are rights that are currently under threat. Land expropriation has many South Africans worried. Numerous organisations have spoken out against this, but few as strongly as the Institute of Race Relations. Below, Terence Corrigan writes, “They will explicitly empower the state – in certain circumstances, but a potentially wide range – to seize property without paying the erstwhile owner for it.” This is a concern not only for South African citizens, but the economy too. The advent of land expropriation will see a severe decline in foreign direct investment, as well as the possibility of financial emigration from wealthy taxpayers. – Jarryd Neves

Terence Corrigan
For more than a decade the Institute of Race Relations has fought a dogged defence of property rights in South Africa.

Through interminable public debates, across iterations of expropriation and land governance legislation, and through a succession of policy proposals, we have warned against the threat of state encroachment and the ideological infrastructure supporting it.

Over the past three years, this has taken the form of an aggressive drive to amend Section 25 of the Constitution and to introduce a new Expropriation Act. Both of these are now well-advanced and sit before Parliament.

The threats these present have been well canvassed. They will explicitly empower the state – in certain circumstances, but a potentially wide range – to seize property without paying the erstwhile owner for it. More than that, a careful reading of the Expropriation Bill suggests that market value compensation is likely to be a rarity. The process is weighted in favour of the state and stands to exert a great deal of pressure on those in danger of losing their property to settle.

But will this be the new normal? Are we looking at a future in which the government has an established ideological framework with readily available tools, and has declared itself willing and eager to use them? Do we see a situation approaching in which all property, particularly landed property, is to all intents and purposes held ‘precariously’ at the pleasure of the state?

Actually, it might be rather worse.

The key concept here is custodianship. This is the taking of an entire asset class, which the state will then hold ‘on behalf of’ the country’s people.’ Such an arrangement exists in respect of water and minerals. One can interpret this as being a situation in which ownership of a certain asset is simply declared impossible by law. Where individuals or private associations might once have been in possession of something, their ownership is extinguished. Interestingly, the state does not technically own it either.

Not necessarily expropriation

To understand this, one needs to turn to the 2013 Agri SA case before the Constitutional Court (Agri SA v Minister for Minerals and Energy). A majority of the Court’s judges held that the taking of property (here, mineral rights taken in terms of the Mineral and Petroleum Resources Development Act) is not necessarily expropriation. As the judgment put it, ‘whatever “custodian” means, it does not mean that the state has acquired and thus has become owner of the mineral rights concerned’.

Where no expropriation has taken place, no compensation is due.

Essentially, what the judgment did was to draw a largely artificial distinction – and certainly a meaningless one from the point of view of those whose property has been taken – between a situation in which the state assumes ‘ownership’ and one involving mere ‘custodianship’. The first would prompt a claim for compensation, the second would not. That the state would take on most of the functions of ownership under this arrangement (think of the issuing of licences to exploit minerals or use water resources) is evidently not factored in.

The ruling, however, did limit itself to the facts before the Court at the time. But it clearly made an impression and showed the potential scope for state action.

The idea of a mass custodial taking of land has never been disavowed, and has cropped up regularly. Aside from calls for action along these lines from political figures, it has made its way into prospective legislation policy documents. In 2014, the Preservation and Development of Agricultural Land Framework Bill sought to vest agricultural land in the state – it being the ‘common heritage’ of the people of the country.

The government’s Land Audit – finalised in 2017, released in 2018 – proposed overarching land legislation that would, among other things, explicitly ‘vest land as the common property to the people of South Africa as a whole’. It also recommended a land tax, so that presumably after having lost ownership, any further occupation and use would be subject to regular payments to the state.

In early 2019, Masiphula Mbongwa, Director General for the War Against Poverty in the Department of Rural Development and Land Reform, told an audience at the World Economic Forum in Davos – hardly a forum suited to tub-thumping radicalism or wild policy speculation (South Africa is, after all, ‘working towards’ policy certainty to attract investors) – that a constitutional amendment would ‘vest land in the people of SA’ (and also introduce a land tax). It would be accompanied by a land law, which he likened to the National Water Act 36 of 1998 and the Mineral and Petroleum Development Resources Act 28 of 2002. Both of these implemented the custodial principles in their respective fields.

Deny them ownership

Meanwhile, even as the EWC drive was painted as a means to empower people who (or whose forebears) were dispossessed or prevented from acquiring property, the government’s own policy has been to deny them ownership. Land redistribution, for example, has for years been premised on not extending ownership to its beneficiaries. Indeed, when Parliament debated whether or not to launch an investigation into the amendment of the Constitution to facilitate EWC, former land minister Gugile Nkwinti made it clear that ownership was not on the agenda – rather, the state would hold the land and make it available.

Custodianship has been presented as a system that would benefit the whole population, a means to extend access to resources. When a frustrated black farmer went to court to try to compel the government to honour an agreement to sell him the land he was working, the government’s court papers were blunt: ‘Black farming households and communities may obtain 30-year leases, renewable for a further 20 years, before the state will consider transferring ownership to them.’ While these timeframes have reportedly been reduced somewhat, the fundamental assumptions remain in place.

More recently, we’ve seen the consequences of this as productive black farmers have been evicted to make way for others. This is a vision of custodianship in action.

Where to from here?

The constitutional amendment and Expropriation Bill do not introduce a custodial arrangement, though crucially they do not prevent one. Indeed, by establishing the principle that property may legitimately be taken without compensation, and by introducing into law the hair-splitting distinction between expropriation and custodial takings – effectively vapourising property rights in so doing – they push this agenda forward markedly.

It is possible that the constitutional amendment may take this further. The African National Congress has indicated it is not satisfied with the proposed wording, and Dr Mathole Motshekga – who co-chairs the relevant ad hoc committee – has made it clear that he would like to see the amendment excluding courts from the process. This would be a profoundly troubling development, removing much of whatever protection people may have from government action.

Not beyond realms of possibility

It is not beyond the realms of possibility that a demand for custodial provisions may yet be introduced.

More likely, though, is that a custodial taking could be introduced through legislation. It should not be forgotten that the takings of water and mineral rights were achieved through ordinary legislation, and within the confines of Section 25 as it exists. An amendment would merely immunise such a move from challenge.

Watch this space, then, for a dedicated land law, which may emerge after the constitutional amendment and the Expropriation Bill have been passed.

One thing, though, is certain: the threat to property rights is ongoing. Fortunately, so is the fight against it.

Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.

This article was first published on the IRR's online platform, the Daily Friend.

https://www.biznews.com/thought-leaders/2021/04/16/property-rights-expropriation-bill

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