Submission of the FW de Klerk Foundation on the Expropriation Bill
Issued By the FW de Klerk Foundation on 13/03/2023

 

On 6 March, the FW de Klerk Foundation made a submission to the Select Committee of the National Council of Provinces (NCOP) on the controversial Expropriation Bill.

The Foundation’s submission focused primarily on dangers inherent in the Bill and on the absence of proper definitions of the concepts of “land reform” and “public interest”.

The Foundation agreed that there is a need to adopt a new Expropriation Act that will conform with the requirements of section 25 of the Constitution. However, the present Expropriation Bill not only fails to provide an appropriate framework for expropriation – but would have very negative consequences for all the people of South Africa.

The Foundation pointed out that:

• the definition of expropriation in the Bill created concerns that should the state deprive owners of property as the custodian of such property – or as a result of regulatory provisions – expropriation would not have taken place and compensation might therefore not be payable;
• the inclusion of the words “including but not limited to” in the list of the circumstances under which nil compensation may be paid, made nonsense of the entire clause. It was vague, open to any interpretation and unacceptable in terms of the rule of law;
• the circumstances in which nil compensation may be paid – including “where land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from an appreciation in its market value” was open to almost any interpretation and required much closer definition. The application of the same principle to other assets such as shares would, in effect, destroy the stock market and the generation of investment based on the legitimate expectation of appreciation in the market value of shares and assets;
• the payment of nil compensation for land “where an owner has abandoned the land by failing to exercise control over it” – might result in serious injustice in circumstances where the owner has been forced from his property by land invasions or building hijackers; and
• in terms of the timetable set out in the Bill, expropriated property could be transferred to the expropriating authority long before a court has reached a decision on equitable compensation.

 

The Foundation took issue with the definition of “land reform” which it believed was far too vague to meet the requirement for informed comment by the public. Land reform could range from the total abolition of private land ownership and the placement of all land under the custodianship of the state – to a positive and liberating extension and entrenchment of property rights for all South Africans.

It was also unhappy with the vagueness of the key concept of “public interest”. In terms of section 25(4) “public interest” is undefined and open-ended but includes “the nation’s commitment to land reform and to reforms to bring about equitable access to all South Africa’s national resources.”

In the Foundation’s view, the definition of “public interest” cannot be left solely in the hands of the government of the day – but must be rooted firmly in the national purposes set out in the preamble to the Constitution and the foundational values in section 1. It must take into account international law and the collective experience of free, prosperous and successful societies throughout the world and throughout history.

In assessing the Bill within the context of “public interest”, consideration must, in particular, be given to the centrality of property rights for all successful societies; the inter-relationship between property rights and basic freedoms; the effect that the Bill and expropriation without compensation (EWC) would have on national unity and targeted communities; and the impact that the limitation of property rights – inherent in expropriation without compensation – would have on the economic and social well-being of everyone in South Africa.

In its submission, the Foundation adduced arguments and evidence for the catastrophic impact that expropriation without compensation (EWC) would have on  ̶

– the improvement of the quality of life of all citizens, listed as a national goal in the preamble to the Constitution, it pointed to the close relationship between free property rights and successful social and economic outcomes illustrated in the following table:

Economic Freedom Quartile	Fourth ¼ (Least Free)	Third ¼	Second ¼	First ¼ (Most Free)
GDP per capita	$6 542	$14 122	$23 234	$48 251
Life expectancy	66	72,3	76,1	80,4
Infant mortality per 1000 births	36,9	19,9	11,2	4,8
Income earned by the poorest 10%	$1 736	$2 641	$5 654	$14 204
Poverty rate at $1,90 PPP per day	31,45%	17,44%	7%	2,02%

– the enjoyment of freedom, as is evident from the following table:

Respect for Property Rights	Fourth ¼	Third ¼	Second ¼	First ¼
Free	28%	34%	45%	75%
Partly Free	49%	45%	37%	8%
Not Free	23%	21%	18%	17%

(Freedom House: Freedom in the World 2016)

 

– national unity, adoption of the Bill and – of the principle of EWC – would threaten the keystone of South Africa’s great national accord – and would seriously undermine prospects of national unity.

The property clause was one of the most closely contested and negotiated provisions in the 1996 constitution. The negotiating parties agreed to a delicate balance between the need to protect reasonable property rights on the one hand – and the need for expropriation to achieve land reform – on the other. The agreement required ̶

• payment of compensation for expropriated property that would have to be agreed to by those affected or decided or approved by a court; and that
• such compensation would have to be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected – taking a number of factors into account

– the agricultural sector, food security, economic growth and job creation – the Foundation pointed out the dire consequences of EWC for the agricultural sector, food security, economic growth, foreign investment and job creation.

The Foundation concluded that the Bill would severely limit the right to property of all South Africans – a core right that is internationally recognised; that is a requirement for free and prosperous societies; and that is essential for the empowerment and the realisation of the potential of citizens.

It held the Bill was unconstitutional insofar as it was irreconcilable with an understanding of the public interest distilled from the Constitution and its founding values – particularly with regard to the negative impact it would have on:

• the improvement of the quality of life of all citizens and efforts to free the potential of each person;
• advancement of freedom;
• national unity and the goal of healing the divisions of the past; and
• agriculture, food security, economic growth and job creation.

 

The Foundation warned that the adoption of the Expropriation Bill might represent the point in the history of post 1994 South Africa at which the country turned decisively away from the great constitutional accord on which our new society was founded.

Find the full text of the Foundation’s submission here.