Expropriation Bill [B4B-2015]: briefing by Deputy Minister of Public Works; with Minister present

Meeting report

Expropriation Bill [B4B-2015]: briefing by Deputy Minister of Public Works
Deputy Minister Jeremy Cronin pointed out that section 25 of the Constitution, which spoke about the right to property, also spoke about expropriation. It allowed for expropriation where it was for a public purpose or for the public interest where appropriate. The deprivation of property via expropriation could not be arbitrary. There must be compensation. Expropriation had to be in a general law of application. There was an Expropriation Act of 1975; there were also pieces of legislation that that gave provinces and municipalities expropriation powers. Different ministers and the President of SA had different expropriation powers in terms of different pieces of legislation. One piece of legislation on expropriation was needed. It had to be done in a constitutional manner. During public hearings on the Bill in the National Assembly, Eskom had complained that their work was hampered by owners of land holding out on them. Both government and Eskom had been uncertain and reluctant on expropriation. This resulted in delays in key projects or huge sums of money having to be paid out. There had been failure on the part of government for over 20 years to put a law of general application on expropriation into place. In 2008 the Expropriation Bill had been withdrawn. He was pleased that it had been withdrawn as it had prevented persons from having access to courts. The Department of Public Works (DPW) had reviewed the old Bill and had corrected mistakes in it. On the current Bill, the DPW had worked with the National Economic Development Labour Council (NEDLAC). He was pleased to report that there was support for the Bill. There was no disagreement on the Bill and NEDLAC had signed off on the early version of the Bill. He noted that AgriSA had also been active participants on the Bill. In 2015 the Bill was brought back to Parliament. The Portfolio Committee had started on the Bill in February 2015 and by September 2015 was actively engaged on it. The Portfolio Committee on Public Works had done good work on the Bill and there had been constructive engagement. It had adopted a revised Expropriation Bill on the 2 February 2016 and the National Assembly had passed the Bill on 23 February 2016.

The Committee was provided with a brief introduction on the Bill and explanation the reasons for the new Bill. The crux of the matter was that the Expropriation Act of 1975 was not in line with the Constitution. Compensation in terms of the 1975 Act was determined primarily on the basis of the market value of the expropriated property. Section 25(3) of the Constitution set out that there needed to be just and equitable compensation and that such compensation be determined having regard to all relevant circumstances. Just and equitable could in certain instances be more than market value. For example where the land on which a poor community was living on was being expropriated. The relocation costs of the community could in some instances be more than the market value of the land.

The Deputy Minister gave an explanation of each of the Bill’s chapters and what its clauses spoke to.

Chapter 1: Definitions and Application of the Act
Clauses 1 and 2 contained the definitions and dealt with the application of the proposed legislation determining that an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or in the public interest.

Chapter 2: Powers of the Minister of Public Works to expropriate
Clauses 3 and 4 granted a general power to expropriate to the Minister of Public Works. The Minister was empowered to expropriate property (a) for purposes connected with the execution of his/her mandate; or (b) upon request by an organ of state (other than the expropriating authority) that satisfied the Minister that it required the particular property for a public purpose or in the public interest. Eskom could therefore not expropriate. Existing expropriating authorities remained expropriating authorities.

Chapter 3: Investigation and valuation of property
Clauses 5 and 6 dealt with the pre-expropriation phase and detailed various procedures to be followed by an expropriating authority prior to an expropriation. These procedures were used to ascertain the suitability of the property for the purpose for which it was required and to gather information on the existence of registered and unregistered rights in the property and the impact of such rights on the intended use thereof.

Chapter 4: Intention to expropriate and expropriation of property
Clauses 7 to 11 dealt with the post investigation phase. At this stage the expropriating authority would have gathered all relevant information and consulted with known parties affected by the contemplated expropriation. Should the expropriating authority intend to expropriate it had to serve all affected parties with a notice of intention to expropriate. The notice of intention to expropriate had to call upon the owner or holder of a right in the affected property to provide a written statement stipulating the amount claimed as just and equitable compensation. All affected parties were given an opportunity to submit written objections within a stipulated period.

Chapter 5: Compensation for expropriation
Clauses 12 to 20 dealt with the determination and payment of compensation to persons whose property or rights in property were expropriated. As stated earlier, section 25(3) of the Constitution stated that the amount of compensation and the time and manner of payment had to be just and equitable reflecting an equitable balance between the public interest and the interests of those affected.

Chapter 6: Mediation and determination by court
Clause 21 provided that in the absence of agreement on compensation, the expropriating authority and the expropriated owner or expropriated holder of a right may attempt to settle their dispute by mediation. In the event that a party did not agree to mediation the expropriating authority had to refer the matter to a competent court. This provision did not prevent a person from approaching a competent court on any dispute relating to this.

Chapter 7: Urgent expropriation
Clause 22 dealt with urgent expropriations. In the case of a disaster or if a court orders so, an expropriating authority may exercise a right to use a property temporarily for a period not exceeding 12 months. If the property was damaged during the temporary use, the expropriating authority had to repair such damage or compensate the owner or holder of a right for the damage.

Chapter 8: Withdrawal of expropriation
Clause 23 authorised an expropriating authority to withdraw an expropriation if it was in the public interest or the reason for which the property was to be expropriated was no longer applicable. Under certain specified instances an expropriating authority may not withdraw an expropriation.

Chapter 9: Related matters
Clauses 24 to 31 dealt with the delivery and publication of documentation, the extension of time allowed for certain actions, the register for all expropriations, civil fines and offences, the power of the Minister of Public Works to make regulations, the impact on existing legislation, repeal of laws and transitional arrangements and savings.

The Committee was also provided with a schematic representation of the expropriation process itself.

The Deputy Minister was accompanied by Mr Andre Meyering: DPW Chief Director: Policy and Ms Mandisa Fatyela-Lindie, DPW Acting Deputy Director General: Policy.

Discussion
The Chairperson thanked all parties involved in the drafting of the Bill. He explained the agreed upon programme for processing the Bill. Members would be briefing the provinces on the Bill from 14-18 March 2016. Provincial public hearings on the Bill would take place during 11-22 April 2016. Consultation with leadership of provincial government would also be taking place. On 26 April 2016 the Committee would be debating on the negotiating mandates of provinces on the Bill. The Committee would seek final mandates on the Bill on 3 May 2016.

Mr W Faber (DA, North West) noted that the Bill spoke about expropriation where there was a willing buyer and seller however in the absence thereof, sworn valuations would have to be obtained. According to the Bill, the expropriation authority would be doing the valuations. He asked if expropriation authorities were equipped and qualified to do valuations. What if the valuation that expropriation authorities come up with is lower than market related value? He gave the example of a person who just purchased a property and took out a bond for R10m. What if the expropriation authority was willing only to pay R6m according to its valuation? Would the owner have to bear the loss of the R4m?

Deputy Minister Cronin replied on the competence of the state to make valuations and the possibility of valuations being one sided, saying that property owners were also required to provide professional reasons why they were unhappy with valuations. It was not a unilateral valuation. There was engagement that took place. There would be instances where the compensation would be more or less than the market value. It was not only the market value that was taken into account. There was thus a warning being put out to banks and financial institutions not to give out loans that were unsustainable. The issue had been discussed with the Banking Association of South Africa (BASA).

Ms E van Lingen (DA, Eastern Cape), referring to the programme of the National Council of Provinces (NCOP) for the Bill, pointed out that the 14-18 March 2016 fell within the week when only two debates were left for the term. She wished the Committee to do justice to the Bill and not to rush it. Concern was raised about the possibility that the NCOP would be dealing with the Bill concurrently with Division of Revenue Bill. Expropriation was a huge issue and should be deal with properly. On the constitutionality of the Bill she noted that when the Fourth Parliament had dealt with the Mineral and Petroleum Resources Development Amendment Bill it had been rushed through the NCOP in 14 days. The DA had cautioned that that Bill would not pass constitutional muster. The NCOP Chairperson had categorically stated that no Bill should be rushed through. The NCOP would not rubberstamp bills of the National Assembly or departments. She stressed that the Committee still needed to go through the Bill clause by clause. She suggested that the Committee go through the Bill clause by clause in another sitting.

Deputy Minister Cronin noted that concerns about the constitutionality of the Bill were unfounded. The DA had not objected to the constitutionality of the Expropriation Bill in the National Assembly. The Bill was constitutional. There was no need to rush the Bill but there should also not be a delay on it.

Mr B Nthebe (ANC, North West) agreed with Ms van Lingen that from 14-18 March 2016 there would be public hearings on the Division of Revenue Bill in the provinces so there was likelihood that there would be a clash with the Bill. The Committee as a matter of fairness had to try to relook at the programme to prevent a clash. SA strove to drive growth. How was infrastructure development to be expanded? The necessary base was needed. The Bill sought to provide such a base. He asked was there any other way to set out infrastructure development without doing expropriation. The DPW was asked whether it would not have been better for them to have completed their Land Asset Register before embarking on the Bill. On page 11 of the presentation, referring to Clause 3(3), he asked which body could expropriate. On page 17, in Clause 9, he asked what exceptions were being referred to.

Deputy Minister Cronin agreed that SA needed growth. Infrastructure development was an important aspect of that. Expropriation was an able means to do infrastructure development. The state needed confidence that for infrastructure development, expropriation had to be done in certain instances. The Bill did not only cover expropriation of land, it was a Bill of general application. He reported that good progress had been made on the land asset register. It was 98% complete. He agreed that an effective land asset register was required. He referred to Clause 9(1)(b) of the Bill itself which spoke about unregistered rights and the exceptions that existed. The DPW had competent staff that was always available to assist Members.

Mr J Londt (DA, Western Cape) was concerned that the Committee was going to duplicate work. He agreed that the Bill needed to be dealt with clause by clause. He shared the concerns of Mr Nthebe and Ms van Lingen that the Committee not rush the Bill through, as there was also the Division of Revenue Bill to be dealt with.

The Chairperson pointed out that the normal procedure was that clause by clause consideration of bills was done in its final stages. He reiterated that from 14-18 March 2016 permanent delegates of the Committee would brief provinces. However, Members were not equipped to do the briefing. In the past the DPW would send its officials with the Members to brief the provinces. The provinces would receive the same briefing that the Committee received presently. Public hearings would be conducted by the provinces from 11-22 April 2016. He noted that if Members felt that 14-18 March 2016 was not good enough then it needed to be communicated to the provinces so they could check their programmes. The Committee would monitor the issue. Dates could be changed if Members lobbied the provinces. The Chairperson said that he heeded the caution by Members not to rush the Bill. On the 3 May 2016 final mandates on the Bill would be considered. There was therefore the months of March 2016 and April 2016 to deal with the Bill.

Ms van Lingen said that the Chairperson himself had conceded that Members were not equipped to present the Bill to provinces. The Committee needed to discuss the Bill clause by clause.

Mr Londt noted that the Chairperson had stated that none of the provinces had stated that they had problems with the programme. Were there any responses from the provinces?

Mr Nthebe agreed that the Committee should deal with the Bill clause by clause at a later time. Members did have the right to seek clarity on the Bill whenever they wished to do so.

The Chairperson said that if any Members had questions on the Bill he would appreciate it if Deputy Minister Cronin could make staff available to assist Members. When Members brief provinces, additional questions would be raised. The clause by clause deliberations would take place on the date reflected on the Committee’s programme. Members would not be deprived of getting a full understanding of the Bill.

Ms van Lingen asked what the Chairperson was saying. Would another meeting be held with the DPW only for Members who wished to be briefed further on the Bill?

The Chairperson responded that the meeting would not be a formal meeting of the Committee but only for those who were interested. Members should forward their names to the Committee Secretary. He noted that he had received positive feedback from his own province, Gauteng, about the process. Northern Cape was also positive on the process. He added that Mr S Mthimunye (ANC, Mpumalanga) had communicated to him that Mpumalanga Province had also been positive about the processing of the Bill. He asked the Committee Secretary if she had received any formal responses from the provinces.

The Committee Secretary responded that no formal responses had been received from the provinces. She noted that the Committee did not usually receive responses from provinces when it came to the NCOP Programme.

Mr Londt was surprised that there were no formal responses. Provinces needed to communicate formally on the NCOP Programme. Why were responses informal?

The Chairperson said that the Committee noted Mr Londt’s concern. The Committee would ask provinces to formalise their responses.

A delegate from the Free State Legislature said that the Free State did not have a problem with the dates on the NCOP Programme.

The Chairperson closed the debate on the NCOP Programme.

Deputy Minister Cronin noted that the NCOP process was the Committee’s own and not the domain of the DPW. All efforts would be made to make the Bill’s process effective. The DPW definitely would not want the NCOP to just rubberstamp the Bill.

Mr Faber said that his legislature, the Northern Cape Province, had not communicated to him whether the NCOP Programme suited it. He noted that if Members were to go through the Bill clause by clause in a special meeting with the DPW, the State Law Advisers should also be present.

The Chairperson said that he could not speak for the State Law Adviser’s Office.

The Parliamentary Law Adviser said that she and a representative from the Office of the Chief State Law Adviser would avail themselves.

Ms M Dikgale (ANC, Limpopo) asked how the value of expropriated property was established. She pointed out that it was difficult for persons to visit the graves of loved ones that were located on someone else’s property.

The Chairperson understood the concern raised by Ms Dikgale since the issue of gravesites was a common one in the Limpopo Province.

Deputy Minister Cronin said that he was aware that people were deprived from visiting gravesites of loved ones. The Bill did not specifically deal with the issue. In the Bill, provision was made for an on-site investigation of the property. There were instances where owners of a property refused access. The Bill had a clause which allowed access to property to do an on-site investigation.

Ms van Lingen (DA, Eastern Cape) asked if the Task Team Report of 2014 could be made available to the Committee. What was the input by the Banking Association on the Bill? She was very concerned about a great deal of legislation going through Parliament, such as the Protection of Investment Bill, that affected foreign direct investment. On land claims for public benefit, she was concerned that the valuation amounts may not be what people expected. She knew of one example where a person was given a valuation offer that was the value of a Reconstruction and Development Plan (RDP) house. She also asked about a woman who wished to secure a piece of land for herself and had to get a bank loan.

Deputy Minister Cronin said that the NEDLAC Task Team Report would be provided to the Committee. The Banking Council of SA had made a submission to the National Assembly. The submission could be provided to the Committee. The DPW had interacted with AgriSA as well. He noted that the Committee should feel free to call whomever it so wished to present on the Bill. He said that the belief out there was that the Bill frightened off international investors. He had interacted with the US Chamber of Commerce and they were reassured with what was being done on the Bill. They were pleased that the DPW was providing them with certainty. The Bill even gave a court guidance on how to make judgements. Investors had to respect the Constitution of South Africa. There could not be unlawful and arbitrary deprivation of property. He noted that AgriSA was pleased that there was certainty on expropriation. Hence there was no frightening off of investors but rather it was giving them certainty. The DPW was committed to land reform but it had to be done in a lawful and constitutional manner. The issue of food security did not really fall within the ambit of the DPW and the Bill. Land grabs could be a problem. The Departments of Rural Development and of Agriculture had to balance land reform with food security.

Mr Nthebe said that the Bill allowed for all three spheres of government to expropriate. He asked what if a national road was to be built through municipal land. How would it be dealt with? If good engagement had taken place on the Bill, he asked for expansion on how land expropriation was to be handled.

Deputy Minister Cronin replied on the matter of a national road said that in that instance the Minister of Transport would be the expropriating authority and deal with the municipality. There were instances where one arm of the state expropriated from another arm of the state. He said that there was sometimes reluctance by the national authority to relinquish property to a province or municipality.

The Chairperson, addressing Ms van Lingen, said that the Committee had received the submissions from the National Assembly, including the one from BASA. He was sure that any other information that was required by Members could be supplied by the DPW.

The Chairperson noted that the Committee was aware that SA found itself in a volatile economic situation. He asked about the impact of the Bill on property owned by international companies and individuals. He had recently visited an old slave house that was located on private property and asked how the Bill would accommodate structures of such historical significance. The Committee had visited the Eastern Cape in 2015 and had come across many abandoned buildings that had been vandalised. How could the Bill deal with empty buildings in city centres?

Deputy Minister Cronin said it was important to preserve the memory of historical places. If the preservation was in the public interest and the owner was difficult, then expropriation could be justified. He noted that derelict and abandoned buildings were not only found in the Eastern Cape but in Johannesburg as well. The Johannesburg Metro could make a decision to expropriate. Once the Bill became an Act, then Johannesburg City could make a policy call. He conceded that there were DPW buildings in the Eastern Cape that were vandalised. The DPW was working on its immoveable asset register.

Ms van Lingen referred to a situation in Pietermaritzburg in KwaZulu-Natal where a traditional leader had allowed a school to be built on his land. He had been under the wrongful impression that he would be compensated. The matter was still not resolved.

Deputy Minister Cronin responded that the case in KwaZulu-Natal was not expropriation. It was about someone that had lost his land. The Bill was not an act yet. The traditional leader would have to show that there had been expropriation. He said that he could not answer the question on the detail.

The Chairperson welcomed the Minister of Public Works, Mr Thulas Nxesi, to the meeting. He said that this was only the first meeting with the DPW on the Bill. The process had a long way to go. The entire Committee Section team was well on board to assist Members in any way necessary.

Closing remarks by Minister of Public Works
Minister Thulas Nxesi said that there was no need to fear expropriation. Governments all over the world had to expropriate for development. The way things were was unacceptable as there were three to five year delays in negotiations. The intention was to try to fast track the Bill as the legislation was needed but proper processes would be followed. The Expropriation Act of 1975 was totally outdated. Expropriation was an essential mechanism for the state to acquire property for various reasons. Government had a major infrastructure development programme which it had to prioritise.

The meeting was adjourned.