Is this the end of property rights?

By Colleen May

‘Let them eat cake’ has to be one of the most memorable statements made before the French Revolution, which saw the ruling royalty lose their heads. Whether Marie Antoinette actually said that is not known, but it is what she is remembered for. What do you suppose the slogan in South Africa will be? Perhaps it will be ‘let them eat promises’ after Land Reform becomes a reality and food production and property rights become a thing of the past.

Land Reform has become a hot topic and it’s little wonder why; the voices against re-opening Land Reform and its ugly twin sisters, the Expropriation Bill and Property Valuation Bill, are foretelling lots of doom and gloom should they come to pass, but how true is this?

Land Reform was formed in 1994 and entailed a three-pronged process of land reform, embracing restitution, redistribution and tenure reform. Basically the aim of Land Reform in 1994 was to transfer 30% of commercial farmland to black people either by restitution or redistribution. They wanted to have this finalised by 1994, then the date became 2014 and now it looks like it might only be realised by 2025.

Before we look at re-opening land reform, the question must be asked, did it work the first time around? One of the problems that quickly surfaced was false claims; some had no historical foundation, while others were claimed by more than one person. False claims are worrying but even more so are claims that have been inflated by the officials involved. Another problem arose in the way the land was redistributed; rather than being divided up into the community (in the case where the land was given back to a community), it was given over to the community as a whole, who then had to decide which members were to be allowed to use the land. This naturally led to massive conflict.

The restitution process for the farmers who sold their land didn’t work, dogged as it was by inefficiency; there were often delays in payment, sometimes for years. But the feather in the cap of Land Reform was the failure of the land reform projects. By government’s own admission, between 50% and 90% of all land reform projects have failed. Formerly successful farms have failed to produce any marketable surplus. The government has endorsed a restitution project that has cost billions of your money; only to leave hundreds of farms defunct of purpose, threatening the one thing on which we are all reliant – food production.

Agri Eastern Cape president and fourth generation farmer, Ernest Pringle, has gone so far as to say, “ To date nearly all successful land claims have resulted in highly productive farms being given over to communities, and becoming unproductive, with total destruction of their infrastructures. It should be clear to even the most fanatical demagogue that turning productive commercial farms into communal farms is a certain way of terminating food production on those properties. Since this is clearly a by-product of the restitution process, it should be fairly obvious that restitution is a threat to food security as well as agricultural exports, and should be terminated as an option.” Strong words but the facts behind them can’t be ignored – threatening food production will do little to put faith in the agricultural industry and will start a mass exodus in this sector, and place South Africa on the road to starvation. Even though the Restitution Bill will seek only to put land back in the hands of those who will use it productively, the potential productiveness of one person in charge of a new farm is not an easy thing to measure. It’s even harder to measure in advance on paper before a court. There is a range of factors that measure whether a farm will be productive or not and few people have faith that the courts will be able to accurately decide this. Instead, Dr Anthea Jeffery, the head of research at the South African Institute of Race Relations, says, “Lost agricultural production also means lost jobs on farms that used to be thriving concerns but have since collapsed. Already, some 331 000 agricultural jobs have been lost (in the period from 2001 to 2012), and some of these job losses have resulted from failed land reform initiatives. The loss of these jobs has already worsened rural poverty, while more land transfers are likely to put an end to more farm jobs – with few compensatory benefits to others – and add to destitution.”

South Africa needs commercial farming to feed the millions of people who reside in urban areas. At present some 90% of food produced in South Africa comes from the country’s 37 000 commercial farmers. How many of these farmers will find themselves on the claim list if Land Reform is re-opened? The actual timeframe for Land Reform will severely compromise the security of the agriculture industry; the actual process will take two decades to complete, meaning tenure insecurity for farmers for at least the next 20 years.

In terms of the actual effect on the property industry there are a number of red flags raised by the two bills, which will go hand in hand with the re-opening of Land Reform claims, namely, the Expropriation Bill and the Property Valuation Bill. The Expropriation Bill of 2013 has been lauded as better than its 2008 predecessor as it allows the courts rather than the state to decide the compensation payable for expropriated property, but says Dr Jeffery, “Although this seems like a major advance, in practice the gain is likely to be negated by other aspects of the Bill, in particular, it allows hundreds of organs of state to take ownership and possession of property simply by giving notice to the owner before any compensation has been paid.” In addition, the Bill also fails to recognise that, where expropriation includes a person’s home, there are eviction laws that come into play and require the express authority of the courts.

The Valuation Bill in the meanwhile defines property as including ‘immovable property’, ‘rights in such property’, and ‘any movable property which is contemplated to be acquired with the relevant immovable property.’ The provision for immovable property in the Bill will allow the state to expropriate not just farmland but also farm equipment, vehicles, irrigation systems and livestock. But a far more dire aspect of this Bill is that it doesn’t just extend to farmland, even though it is being introduced by Rural Development and Land Minister Gugile Nkwinti, its provisions extend to land on which mines, factories or other buildings stand. The Expropriation Bill gives the power of expropriation to all the national and provincial departments, municipalities and organs of state.

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If you want to contest the compensation that has been decided by the courts for your property and land, the Valuation Bill allows the government to proceed directly to expropriation, regardless of whether or not there is any dispute over the compensation by the parties involved. You, as the owner, may lodge an objection with the office of the valuer-general within 30 days, and the valuer who was responsible must then ‘promptly’ (there isn’t a time limit given so promptly could mean anything,) decide on the objection and give a written reason for his decision. If you are still not happy with the outcome, you then have to apply for a review of this decision by a ‘valuation review committee’, who are able to close its meeting to the public when deliberating on a decision. The lack of transparency in this process is frightening. Who will be ensuring that this process is fair and accurate and not touched by corruption? Once a decision has been made, that decision is final and binding and is only subject to a review by a court of law. So only after you have been through two review processes totalling who-knows-how-many days can you actually take your case to the courts, an option that in reality only the very wealthy could afford, as going through the courts is a lengthy and costly procedure for someone who has just lost their property and possibly their only source of income to the state. The Expropriation Bill will attempt to make it quicker and cheaper for the State to expropriate land for less than market value and with no mind for further losses suffered by the owner, including loss of future income.

Dr Jeffery sums up both bills perfectly, “In combination with the Expropriation Bill and the green paper, the Valuation Bill threatens the property rights of all South Africans. It clearly forms part of the ‘second phase’ of the ruling party’s national democratic revolution. Part of its aim is doubtless to make it easier to achieve ‘state ownership of all the land in the country’, as the Congress of South African Trade Unions (COSATU) has urged in order to ‘empower the democratic state to break the power of white capital’. Cosatu will in fact be getting even more than it anticipated because so much property other than farmland will also be vulnerable to cheaper and quicker expropriation by state.”

The government seems to be playing fast and loose with the property rights enshrined in the constitution and it remains to be seen whether the Pandora’s box of bills will pass or not. One thing that can’t be denied is that there are surely better ways to go about addressing the wrongs of the past than destabilising food production and pushing bills through parliament that will destabilise the property industry in South Africa, an industry that contributes greatly to the economy, to job creation and wealth creation for all.