NEASA submits written comments on Expropriation Bill

On 6 February 2023, the Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure invited interested parties to, once again, submit written comments on the Expropriation Bill, as part of the public participation process, upon consideration of the Bill by the National Council of Provinces. The National Assembly has already accepted and adopted the Bill in its current form.

Although NEASA has submitted written comments, as well as oral submissions, during the previous opportunity granted for public participation in February 2021, its latest submission directly analyses which sections of the Bill will cause the damage to the country’s economy, as well as to the socio-economic and property regime stability, and explains why.

In its submission, NEASA argues, from the onset, that the Expropriation Bill “poses a legion of dangers through not only its vague and ‘open-to-interpretation’ wording, but through its very existence and its core essence of removing the security and strength of absolute property rights.

“At the heart of the Bill lies the ruling party’s (the ANC’s) insatiable drive toward socialism and nationalisation of private assets, to the detriment of the economy and the enrichment of the greedy. The basis of this argument lies in the non-definition of public interest and the explicit inclusion of the country’s commitment to land reform”, NEASA stated.

NEASA criticised not only the Expropriation Bill, but also the consequences of its application in cooperation with the Land Court Bill. NEASA accuses the Expropriation Bill of slyly obscuring the obvious connection between the two Bills, “so as to conceal the larger socialist intention of the government with these concurrent Bills.”

The Employers’ Association echoed the sentiments of the Institute of Race Relations (IRR) in its submission, regarding the sinister intentions of the state in its attempts at expropriation of all property, and not only land. The submission quotes that “the introduction, also without compensation for resulting losses, of prescribed asset- and other rules, that will require pension funds, banks, life insurance and other institutions, managing R16 trillion’s worth of savings, to invest these in Eskom, other failing SOEs, and the government’s ‘infrastructure’ bonds.”

In NEASA’s analysis of the Bill, it highlights the possibilities created by the Bill for ‘passive expropriation’. It argues that “when the property concerned is not land, but business ownership, shares, other real rights etc., ‘public interest’ is black economic empowerment and forced, or synthetic, equity.” It explains that although acts, such as the Broad-Based Black Economic Empowerment Act and the Competition Act “do not address or allow for direct expropriation of privately owned property”, they are effectively “structured and enforced in such a manner, that ownership and ownership rights are not only stunted to a great extent, but the dilution and division thereof is actively achieved through destructive limitations based on the race of the property owners.”

According to its submission, NEASA has no objection against lawful, substantively and procedurally fair land restitution, in order to redress the result of past racial discriminatory laws or practices, nor does it object against the notions of security of land tenure. However, the Association states that it “vehemently objects against the notion of land redistribution, regardless of the state’s motivation/justification thereof.”

NEASA dedicates a considerable portion of its submission to the Bill’s attempts of allowing for expropriation of property subject to mortgages. It reaffirms its arguments made in its previous submissions on the Bill by stating that:

“If the Bill is enacted in its current form, banks will become more reluctant to extend mortgage finance, for they will know that houses and other properties that might in time be expropriated are unlikely to provide sufficient collateral for loans. This will make it more difficult for prospective homeowners – very many of whom are likely to be black South Africans – to secure mortgage bonds in the future. It will also become very much more difficult for farmers and a host of other businesses to borrow working capital using their land as collateral. This could gravely undermine agricultural production, food security, and the growth potential of the entire economy.”

Lastly, the Association calls for the amendment of section 12 of the Bill, which provides for the determination of compensation in the event of expropriation, with specific reference to the possibility of compensation being set at ‘nil’, and still qualifying as ‘just and equitable’. To illustrate but one strong contention of NEASA against the Bill, the Association submitted that “the current section 12(3) of the Expropriation Bill, which ultimately aims to erode and eliminate consensus by usurping the authority of the judiciary by legislating predetermined circumstances, that upon which an expropriating authority may determine the amount of compensation to be nil, is unconstitutional.” It consequently calls for the deletion of the entire subsection, as it deems it to be “constitutionally offensive”.

NEASA does not mince its words, and outrightly states that “the Expropriation Bill attempts, in its current form, to go far beyond the reach and authority of the Constitution’s provisions regarding the deprivation of privately owned property.”

It concluded its submission by stating that “the Constitution, together with other legislation, already allows for expropriation in the public interest and for public purposes, including the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources”. NEASA expresses its comprehension for the state’s desire to have a legislative mechanism, subject to the provisions regarding expropriation in the Constitution, to regulate and facilitate the administrative and procedural matters regarding expropriation, but believes that “the Expropriation Bill is flawed to such an extent, that it is not only unconstitutional in its current form, but entails dangers which South Africa’s people, economy and socio-economic dispensation cannot survive.”

NEASA’s full submission can be read here.