Frightening aspects of Expropriation Draft Bill

Janine Myburgh, president, Cape Chamber of Commerce and Industry

One of the most frightening aspects of the Draft Expropriation Bill is that it gives our 257 municipalities the right to expropriate property without compensation.

The biggest demand for land is in the urban areas so municipalities will be the authorities most likely to do the expropriating and
they will be given dangerous powers which most of them are not competent or equipped to use.

The performance of our municipalities leaves a great deal to be desired. This is clear from the fact that only 33 of our 257 municipalities obtained clean audits last year and the auditor
general has complained of the lack of accountability and that his advice is simply ignored.

In addition, there is a vast corruption problem with, for example, municipalities collecting money for electricity and spending it on other projects instead of paying Eskom. Municipalities now owe the electricity company R17 billion.

Municipalities cannot be trusted to implement expropriation without compensation fairly and with the administrative justice demanded by Section 33 of the Constitution.

The bill gives five examples where “nil compensation” would be justified but it also states that expropriation without compensation is not limited to these reasons.

This opens the
door to a wide range
of reasons, valid or invalid, for seizing land without having to pay for it.

Even the examples given in the legislation fail to meet reasonable standards of fairness. One of the examples is land held for speculation but who decides whether land is being held for purely speculative purposes
or for future expan-
sion?

If a project is delayed, does this give some municipal manager the right to decide that the real purpose of the purchase was speculation and then to confiscate the land without paying for it?

It is obvious that speculative land has value and to expropriate something of value without paying for it is akin to theft.

The one case where expropriation without compensation is justified is in the case of unused land held by state-owned entities and which could be better used for housing. However, this is meaningless as the state-owned entity could simply refuse to give
its consent and this
is the end of the
matter.

The section on expropriation without compensation is so vague that the risk of abuse is unreasonably high. A municipality can for instance, confiscate land for a community project but there is nothing in the legislation to compel the return of the land if the project is never implemented. This leaves the way open for a corrupt municipality to invent a fanciful community project as an excuse to confiscate land.

A major concern is that the definition of property is not confined to land, and the legislation can therefore be used to confiscate anything from intellectual property to shares in a company as long as this is “in the public interest”.

This provision can be used to justify the confiscation of a pharmaceutical company or a private hospital as health services are in the public interest.

The Expropriation Bill opens the way to nationalise any number of industries, possibly without compensation. It certainly provides for the seizure of any form of property by any expropriation authority including 257 municipalities. It provides a licence to steal as long as some kind of “public interest” justification can be cited.

The combined effect of the bill will diminish property rights and create the kind of uncertainty that will make investors reluctant to invest in any form of property in South Africa. The effect of this will be to undermine economic growth and increase unemployment.