Tomorrow is the deadline for public comment on the Expropriation Bill, which would give the minister of public works sweeping powers to expropriate private property – ranging from homes to business premises, and even shares and other investments – “in the public interest”.
Critics of the proposed legislation say it is vague and could severely damage the country’s investment credentials.
But yesterday Deputy Minister of Public Works Jeremy Cronin told The Times that the bill “makes sense” in the context of South Africa’s “historical reality”.
Part of that reality was revisited yesterday when tens of thousands of Zion Christian Church members gathered in Pretoria for a prayer meeting to mark the centenary of the enactment of the 1913 Land Act.
The act is widely regarded as the trigger of a series of laws of dispossession that later became the apartheid system, which limited black South Africans’ fixed property purchases to “scheduled black areas”.
Cronin said the bill would be better suited to land reform than the current Expropriation Act, which dates back to 1975.
He said the government would not “whimsically” expropriate once the bill was enacted.
But Manus Booysen, a partner at law firm Webber Wentzel, warned that the bill, if enacted in its current form, would “have severe implications for property rights”.
Respect for property rights and intellectual property protection were listed among the country’s strengths in the World Economic Forum’s Global Competitiveness Report for 2013.
South Africa came 26th among 144 countries on protection of property rights and 20th on the protection of intellectual property, the report showed.
Property, Booysen said, was so broadly defined in the bill that it would include movable assets such as vehicles and works of art. It also refers to “a right in, or to, property”.
“This means that shares in a company, as well as various rights in property – including intellectual property rights and incorporeal property – could be expropriated under the bill,” said Booysen.
On compensation, Booysen said “there is no guarantee that you will get market value”.
The bill lists several factors that a court should take into account when considering the validity of an expropriation – and market value is just one of them.
The list is not exhaustive, meaning that “any other factor” could also be taken into account.
This, Booysen argued, would create uncertainty and was “a deterrent to both foreign local investment in this country”.
The bill does more than merely empower the minister to expropriate property for a “public purpose”, as provided for in the current act.
It also allows the minister to expropriate property in the “public interest”.
Though this is in line with the constitution, Booysen said the bill did not provide additional criteria to help in the assessment of what would be in the “public interest”.
But Cronin downplayed this, saying expropriation could still be challenged in court “if [the expropriation] is just to enrich somebody’s cousin”.
Cronin said the definition of property was deliberately kept “general” and that the bill was drafted on legal advice “to not get trapped into a definition”.
The DA’s spokesman on public works, Anchen Dreyer, said she was concerned that the bill, if it became law, would undermine security of property ownership.
“Security of ownership is essential for investment, foreign as well as domestic, and for starting or expanding businesses. If this right is tampered with, there will be little growth, with an adverse effect on job creation,” she said.
The bill succeeds a 2008 version, which was withdrawn towards the end of that year because of concerns in the consultation stages that it would severely damage the property market and discourage investment.
Cronin said that the bill was still being discussed by the National Economic Development and Labour Council.