Property Rates Bill: conservation land; exclusion, exemptions, reductions & rebates

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
11 June 2003
PROPERTY RATES BILL: CONSERVATION LAND / EXCLUSION, EXEMPTIONS, REDUCTIONS AND REBATES

Chairperson: Mr Y Carrim (ANC)

Documents handed out:
Local Government Property Rates Bill (B19-2003)
Valuation and Rating of Conservation Land and Properties: Policy Issues and Options
Exclusions, Exemptions, Reductions and Rebates: A Framework for Discussion
Concerning Regarding the Property Rating Bill by Venn Diagnostics
Provincial & Local Government: Conservation, Biodiversity & National Parks by Rev A Goosen (see Appendix)

Relevant documents:
Draft Protected Areas Bill
Briefing on draft Protected Areas Bill

SUMMARY
The Committee heard amendment proposals suggested by Conservation Bodies to the Bill. The Committee favoured the proposed amendment to the definition of protected area as noted in Clause 15(2) of the Bill. There was lack of agreement on the proposed amendment to subclause (2) in Clause 3 of the Bill. It was also briefed on the concepts of Exclusion, Exemptions, Reductions and Rebates.

MINUTES
Valuation and Rating of Conservation Land and Properties: Policy Issues and Options
Mr Nico McLachlan (Organisation Development Africa) noted that this presentation (see document) is due to submissions made by various conservation bodies. These conservation bodies propose that private land earmarked for conservation or biodiversity management purposes by conservation authorities, be considered for exclusion or exemption and/or rebate against property rates in terms of Clause 15(2)(e) of the Bill. They contend that the principle should be that 'rates would not be used as a penalty to those landowners who commit their land for public benefit in protected areas'.

Discussion
Ms J Manche (Deputy Director-General: DPLG) noted that the department has had an in-depth discussion on this matter. It has always been the department's intention to see to it that all properties are rated. However after they took into account that South Africa is a signatory to the International Convention on the Protection of Biodiversity, then they decided that state-owned conservation properties should be excluded, provided that they are not engaged in commercial activities. The rationale being that it would be easier for the department to monitor the State and ensure that those properties are kept in such condition. However the same cannot be said of private owners as the department does not exercise any form of control over them and thus cannot be sure whether those properties are kept in their conservational condition. Yet she did not exclude the possibility of those areas being exempted. She said that this would be determined by Key Performance Indicators, which should be set up by the Minister, and secondly, by the owners undertaking to abide by those KPIs - thus ensuring the preservation of their properties as conservation areas. Therefore should private property owners refuse to abide by the agreement reached between themselves and the department based on negotiations, then their properties would lose the protection afforded to conservation areas.

The Chair noted that it is important that two cases should be distinguished in this regard. That is when the land joins or is adjacent to the conservation area and where the land, itself, has been identified as a conservation area in terms of the International Biodiversity Convention. Therefore the Committee should come up with mechanisms, which would ensure that the process is not abused, especially since there could be a flood of applications as people try to evade property rates.

Rev A Goosen (ANC) noted that the private owners of those properties should either be indemnified or else the government may approach them and offer to buy those properties and then incorporate them into the protected areas.

Ms Manche said that her department in conjunction with the Department of Environment and Tourism would indeed look at the draft Protected Areas Bill and see to it that loopholes are tightened and those areas that are exempted continue to be preserved as conservation areas.

The Chair wanted to know how much conservation land is still in private hands.

Ms Z Ebrahim (ODA) responded that about thirteen percent of conservation land is not state-owned.

The Chair noted that the Committee seems to be in agreement that the proposal of the conservation bodies to amend the definition of 'protected area' is very proper and as such it would consider it. However it should be noted that the Committee cannot refer to a draft Bill, which is still being considered by Parliament in case it does not came into promulgation. Thus in this regard it would note in its report that the definition of a protected area as defined in the Bill dealing with environmental protected areas, which is still before the Parliament, is favoured.

Ms Manche objected to the proposed amendment to Clause 3(2) of the Bill and said that it would not be necessary for the municipalities to consider the effect of the rates on threatened ecosystems.

Rev Goosen disagreed and contended that an ecosystem is a specialised area, which definitely requires a unique treatment taking into account its uniqueness.

Mr J Durand (NNP) noted that municipalities have limited financial resources and as such it would be unfair to expect them to finance such unnecessary costs.

The Chair said that it should be noted that no one says that local government should finance the costs associated with these threatened ecosystems effects. The argument seems to be that municipalities should take ecosystem effects into account in their rating policy and thereafter apply their minds accordingly with regard to those effects. There are three options available to the Committee:
- it can agree to loosen this provision, but in doing so it should guard against opening a floodgate of unscrupulous applicants.
- it can either decide that the inclusion of such provision would not be necessary as the provisions of the IDPs (Integrated Development Plans) would take care of such.
- it may decide that this provision should be kept in abeyance until the Committee has been provided by the conservation bodies with details of such lands and the impact of the income lost to local government.

Mr B Solo (ANC) noted that taking into account the fact that IDPs have been a complete disaster and are far from what the Committee contemplated them to be, then it would be proper to accept that they are not an option, as they also still need to be carefully reconsidered.

Mr M Ngubeni (ANC) was concerned that the interpretation of the word "threatened ecosystem" may create an interpretational nuisance and so the proposed provision should not be included in the Bill.

The Chair noted that the Committee seems not to be in agreement regarding the proposed addition to subclause 3(2) and as such it would have to consider this further. Therefore the Committee, assisted by the Department as they would be responsible for monitoring the implementation of the Bill, would re-look at the drafting.

He requested ODA to ask the conservation bodies to provide the Committee with details of the lands that have been identified in terms of the biodiversity management framework. There needs to be an indication regarding the distribution across the municipal jurisdictions, with specific reference to urban and rural spread and also to quantify the impact in terms of income foregone to local government.      

Exclusion, Exemptions, Reductions and Rebates
Mr McLachlan noted that this presentation is aimed at ensuring that all involved have the same common understanding of the terms employed in the Bill (see document). Ms Ebrahim added that it is important to note that Clause 15 of the Bill dealing with exclusions relates to constitutional constraints. Whilst exemptions, reductions and rebates are at the municipal council's discretion based on its rate policy as stipulated in Clause 14 of the Bill.

Mr Solo noted that the Committee acknowledges that the new concept of reduction is novel to the Bill and is as a result of the new dispensation in our country. However in order for the Committee to accept it, it would be appropriate for the Department came up with compelling reasons why such a concept should be allowed and the failure to do so would result in it being excluded.

The Chair noted that the Committee agrees that the terms would be retained, whilst the department is still formulating its reasons, which would also include the proposal as to how the loopholes associated with these terms can be avoided. He noted that, as he is going on leave, the Committee would meet on 17 June under the chair of Mr Solo and Mr Ngubeni to finalise this matter and continue deliberating on other aspects of the Bill.

The meeting was adjourned.

Appendix 1
Presentation to Portfolio Committee on Provincial and Provincial and Local Government

Provincial and Local Government Conservation: Biodiversity and National Parks
The submissions by people representing Conservation, Biodiversity and National Parks are making a case for the important role, which they are playing with regards to sustainable development. They are all pleading that clause 15(2)(e) be amended, so as to include the exemption of private property, which forms an important part of conservation and bio diversity. The amendment would read thus, "All land declared...' and not just "any state land declared …"

I will highlight each submission, to show what each of them are emphasizing, so that the committee will be in a position to make an informed decision on how to take the matter forward.

The Western Cape National Conservation Board
Is of the opinion that most of the biodiversity sites in the province are in private ownership, and that a cost effective means of conserving it would be to encourage the appropriate use of the land.

The Board has set up PPP, which contribute to local rural economy and that support biodiversity. Levying of rates on private property will have a negative effect on these partnerships -- they will withdraw from it.

What they do recommend is that split or differential rates for such PPP, which support biodiversity, be considered.

The Botanical Society of South Africa
Much of the country's biodiversity occurs on farmland, and that the rates policy will lead to the loss of biodiversity. They go on to say that:
There is a need to protect biodiversity that resides on rateable land - land that is not owned by the state.
Rates must be of such a nature that it encourages wise land management in order to conserve biodiversity.

Whereas the Protected Areas Bill 2003 make provision for, "land with its biodiversity which is often in private ownership, be incorporated into National and provincial protected areas", clause 15(2)(e) of the Bill disallows a municipal rate exemption for private land contractually bound into a national or provincial protected area.

They too are of the opinion that it will lead to the loss of important biodiversity in the country.

Ezemvelo KZN Wildlife
For what its worth, they caution that the bill not be in conflict with the world Heritage and Biodiversity Conventions, to which we are a signatory.

Like the other parties, they too share the view that biodiversity occurs on privately owned land, and fear that owners will be forced to utilize the land for some other activity, so as to earn an income, to offset the rates payable on the property.

Enviro Governance Trust
They say that protected areas are not a source of income to the municipalities, but they do contribute to the local economy by means of tourism to the area, and that it:
· Will be short-sighted to impose a rate on these areas, for the simple reason that it will undermine the sustainability thereof, and
· The exclusion of private land from the exemption of rating, will undermine efforts to establish PPP, which could lead to the expansion of the country's National Parks.

South African National Parks
They argue:
That the State is the guardian of protected areas, and must promote conservation; SANParks is presently exempt from rates, because it contributes to provincial and national economies.
To limit clause 15(2)(e) to "State owned land..." would impose a financial burden on SANparks and the State and be detrimental to conservation.
That to exclude areas used for commercial and business purposes is unjustified. The state and the parks would be the losers.
Private land is "sterilized" in favour of the state when it is included into a national park, and may not be used for any other purpose other than those outlined in the aims, objectives and policies of the park.
The fact that the owner can be indemnified from liability for rates on the property is so strong that landowners insist on the inclusion of such a clause, and the parks thus being responsible for the payment of rates.
This tends to be a better option for the park, especially since 7% of South Africa's national parks are private land, and contractually incorporated. With more land needing to be incorporated, this percentage will grow to 20%.

The state would already have had to spend up to R3,7 billion to acquire private land, as part of her National Parks. The increase of up to 20% represents R7,5 billion. This is finance that the country can ill afford - in order to acquire land for conservation and biodiversity.

SANParks is an organ of state, and the state receives all income derived by SANParks.
It has no profit and
No part of a National Park is used for business purposes.
The imposition of rates would make National Parks less accessible, because fees and charges would have to be increased, to offset the rates payable to municipalities.

It will have a ripple affect in that it: 1). Would harm the RDP,
2). Shared ownership.

Botanical Society of South Africa
"If rates on private land is levied, landowners will be compelled to put land into production to cover
rates liabilities". They go on to say that if landowners commit their land for public benefit in protected areas, they must not be penalized for it, by rates being levied on their property. Private property must be exempted, but no exemptions must be considered for:
· Buildings,
· Commercial activities,
· Private game farms, or
· Other type of conservation area.

Their Amendment is that "All land", and not just "State land" in National Parks, Nature Reserves equivalent protected areas be considered by the Portfolio Committee.

They also reckon that a preliminary analysis reveals that the number of properties this would apply to in any given municipality, is very small and that the rates sacrifice of a municipality would be less than
2%. The committee must consider whether private property, which is part of conservation, National Park or for its biodiversity, should be exempted from rates.

There seem to be some merit in the case especially in instances where there does not seem to be any commercial activity taking place on that land, because the state has control over it. In those instances where commercial activity is taking place, those stretches of land should be brought under the rating system. The idea of differential rates seems to be an idea that can be taken further for consideration.

I am of the opinion that each instance must be considered on its merit as to whether it qualifies for an exemption. The grounds thereof must be that it contributes to conservation, and whether any biodiversity is occurring on that land.

Rev A.D. Goosen (MP)