The Department of Public Works briefed the Committee on the legislation governing the state’s immovable assets, outcome of the legal opinion for transfer of land for restitution purposes and properties earmarked for land reform. The Deputy Minister was in attendance.
With the operationalisation of the Property Management Trading Entity (PMTE), as well as the requirements of the PFMA, which informs the releasing of properties at market value and the Property Valuers Act, a legal opinion was sought to determine which Act supersedes the other.
The outcome of the recent Legal Opinion obtained is as follows:
-The legal status of PMTE as a Trading entity does not warrant an interpretation or application of the relevant statutory provision so as to preserve for the PMTE an entitlement to market-value compensation of assets disposed of for purposes of land restitution.
-Further, nothing in Treasury Regulation 19 imposes a legal obligation on a trading entity to dispose of assets only at market value; and there exists no legal requirement for NT to approve a disposal of immovable property below market value.
The Department reported the following:
-98 (43-NDPW & 55 other custodians) properties are targeted for release before the end of the 2018/19 financial year by all custodians;
-100 properties are targeted for release before the end of the 2019/20 financial year by all custodians;
-A further 100 properties should be released in 2020/21 financial year by all custodians; and
-The North-West Province has been identified as the province that has the largest number of outstanding settled Restitution claims (93 properties). To fast-track the Restitution Programme; NDPW has engaged the Province to release of the identified properties.
- Ownership verification of 278 outstanding restitution claims was undertaken by NDPW, out of the 278 outstanding claims 158 properties are under the custodianship of the Department. These will only be processed as Phase 2 once requests with supporting documentation are received from DRDLR
Members asked if the Department was in line with what the President said during SONA in terms of capacity, resources and money in carrying out its land restitution work; requested the Department to report on the provincial breakdown because the DA in the Western Cape has returned to National Treasury R1.7 billion of the land reform budget and wanted to know if there was any residential property leased by the Department to any individual and how much income was generated. They further noted that the legal opinion for the transfer of land for restitution purposes was contrary to National Treasury regulations; remarked they were having difficulty understanding why there would be negative financial implications for the PMTE when the OVG has ascribed a positive value to the land; wanted to know if the 261 properties were of industrial or agricultural nature in order for the committee to give tacit approval; wanted to understand the criteria used for the release of properties earmarked for land restitution purposes and its intended beneficiaries; and asked which legislation has given existence to the PMTE.
Owing to time constraints, the Department could not respond to all the questions and was advised to address the outstanding ones when it met with the Committee again the following week.
Briefing by the Department
Ms Sasa Subban, Deputy Director-General: Real Estate Investment Services, DPW, took the Committee through the legislation governing the state’s immovable assets, outcome of the legal opinion for transfer of land for restitution purposes and properties earmarked for land reform.
She informed the Committee Sections 76(1)(k) and (l) of the Public Finance Management Act (Act 1 of 1999)(PFMA) state that the National Treasury must make regulations, concerning the alienation, letting or other disposal of state assets and gifts or donations by or to the state. Treasury Regulations 16A7.3 requires that any sale of immovable state property must be at market-related value, unless the relevant Treasury approves otherwise.
She stated that according to the Property Valuation Act, 2014 (Act No.17 of 2014) when the Office of the Valuer-General (OVG) valued land at zero, the Property Management Trading Entity (PMTE) was required by law to transfer the land gratis. When the OVG ascribed a positive value to the land, the Department of Rural Development and Land Reform (DRDLR) must provide further justification to PMTE and Treasury as to why the land could be transferred gratis. She stated this could have negative financial implications for the PMTE. Treasury indicated it would actively monitor the financial health of the PMTE and act to improve sustainability and viability via Treasury processes.
Ms Subban reported that a legal opinion was sought to determine which of the two Acts superseded the other between the Public Finance Management Act (Act No1 of 1999) and Property Valuation Act with regard to the operationalisation of the PMTE as well as the requirements of the PFMA which inform the releasing of properties at market value. The legal opinion stated that “The legal status of PMTE as a trading entity does not warrant an interpretation or application of the relevant statutory provision so as to preserve for the PMTE an entitlement to market-value compensation of assets disposed of for purposes of land restitution. Further, nothing in Treasury Regulation 19 imposes a legal obligation on a trading entity to dispose of assets only at market value; and there exists no legal requirement for National Treasury to approve a disposal of immovable property below market value.” The legal opinion, it was reported, has given the Department power to accelerate land reform for restitution purposes.
It was further reported there were 539 claimed properties provided by the Department of Rural Development and Land Reform (DRDLR). 261 properties were for settled claims and were made up of 141606.4352 ha. The verification was undertaken by the DPW. They were processed by a committee responsible for land care development. 278 properties were for outstanding claims and were consisting of 267636.92 ha. These were still being processed by the DRDLR. An action plan spanning over a three year period has been developed and the DRDLR would be working in close collaboration with the DPW on this.
Out of the 261 settled claims, 43 properties were under the custodianship of the DPW. The North West province had the largest number of outstanding claims. The DPW was part of the Inter-Ministerial Committee (IMC) on land reform. The following programme for land reform has been presented to the IMC:
• 98 (43 DPW & 55 other custodians) properties were being targeted for release before the end of the 2018/19 financial year by all custodians
• 100 properties were being targeted for release before the end of the 2019/20 financial year by all custodians
• 100 properties would be released in 2020/21 financial year by all custodians
• The North-West Province has been identified as the province that has the largest number of outstanding settled Restitution claims (93 properties). To fast-track the Restitution Programme, DPW has engaged the North West to release some of the identified properties
Ms Subban further indicated that ownership verification of 278 outstanding restitution claims was undertaken by the DPW. Out of the 278 outstanding claims, 158 properties were under the custodianship of the DPW. These would only be processed as Phase 2 once requests with supporting documentation were received from the DRDLR.
(Tables with figures were shown to illustrate properties earmarked for land reform, action plans for settled claims, and DPW property parcels released during the 2018/19 financial year)
[Due to time constraints the department did not provide answers to members’ questions and it was asked to present its compilation of responses when it engages with the Committee next week].
Mr F Adams (ANC) asked if the Department was in line with what the President said during SONA in terms of capacity, resources and money in carrying out its land restitution work. A proper briefing on this matter would have assured the Committee the Department was ready to execute what was said during SONA. It would have been better for the Department to report on the provincial breakdown because the DA in the Western Cape had returned R1.7 billion to National Treasury of the land reform budget though it has been complaining there was no land available and not enough money from the national department. He also wanted to know what happened to the disputed erf 212 in Bishopscourt which was one of the two erfs claimed there.
Dr M Figgs (DA) stated that the allegations made by Mr Adams would be verified to see if the information was true, and he was happy that everything he said was on record. Second, he wanted to know if there was any residential property leased by the Department to any individual and how much income was generated. Third, he asked if there were any donations received by the state or given by the Department to the state. Fourth, he wanted to find out if there has been any property that had been sold at low market related value to any individual and what the price was. Fifth, he asked the Department to submit to the Committee a list of land parcels valued at zero and those donated at gratis. Sixth, he wanted to understand if there were any properties that were in close proximity to the urban areas that could be used which were in a dilapidated condition. Lastly, he said his concern was that the legal opinion which was contrary to National Treasury regulations.
Dr Q Madlopha (ANC) said she was having difficulty understanding why there would be negative financial implications for the PMTE when the OVG has ascribed a positive value to the land, and asked what the National Treasury would monitor to make the PMTE sustainable. She further wanted to know what National Treasury would do exactly if the current operating model of the PMTE was affecting its liquidity. Lastly, she indicated the action plans for settled claims were lacking time frames and it was not explained who the “other custodians and relevant stakeholders” were.
Mr M Filtane (UDM) wanted to know if the 261 properties were of industrial or agricultural nature in order for the Committee to give tacit approval. He also asked how the government came to own properties that have been claimed and was now thinking of disposing them. He wanted to find out about the rationale for the intended disposal because his understanding was that the government had a life time commitment to provide social services to the citizens because the population was growing and these properties could be leased for agricultural purposes over a period of time. Lastly, he wanted to understand the criteria used for the release of properties earmarked for land restitution purposes and its intended beneficiaries.
Mr D Ryder (DA) indicated he was alarmed that some properties earmarked for land reform which needed to be verified had unknown owners. He further remarked that the DPW should be seen as an enabling department for land restitution, but not the driver of the process. There was nothing that stopped a government department from expropriating from another government department. That was constitutional. Recently, the Committee had a discussion with a high level panel where he complained there was a lack of political will on the willing buyer-willing seller approach and it was not clear on certain matters. The government must use its powers to expropriate strongly. He then wanted to know what would happen to the land in terms of ownership or security of tenure. He asked if the land would be transferred to the Department of Rural Development and Land Reform to ensure there were tenants of the state. He wanted to know what processes would be followed with regard to the unsettled claims, including the 261 claims that have been settled. He also pointed out there was a claim that was lodged in 1998 about a property near Cape Town Airport. A cash offer was made in 2013 to the claimants, but they rejected it because they wanted an alternative government property. 2019 came and the claim has not been dealt with. He wanted to understand what processes would be followed regarding the 278 outstanding restitution claims and what the time frames would be. He recommended to the committee the meeting with the DPW should be captured in the legacy report with a clear set of indicators of what the next step would be.
Ms E Masehela (ANC) wanted to know what the status of the asset register was. She also asked for clarity on the legal opinion for the transfer of land for restitution purposes. Lastly, she wanted to know if the Department had strategies in place to capacitate people who have been given the land to avoid having idle land.
Mr N Matiase (EFF) asked which legislation had given existence to the PMTE because the Committee was dealing with matters that were very important, but to him it appeared the PMTE was another BOSASA. The government might be creating a problem by assigning land reform responsibility to an entity that might be illegal. He was concerned about the vocabulary that was used in the meeting which, to him, suggested that land would be disposed of to those who had money. Millions of hectares of land would be sold to the highest bidders, yet it was not known who the owners of the certain pieces of land were the presentation talked of because they were referred to as “other custodians” and “relevant stakeholders.” Land must be transferred at zero rate or gratis. The PMTE should be expected not to generate income from the process because that would be an unlawful activity.
Ms D Mathebe (ANC) commented that the Bakgaga-Ba-Kopa community claims have been finalised, but there were still outstanding documents. She further suggested the Committee should be furnished with the provincial breakdown of the asset register.
Mr Jeremy Cronin, Deputy Minister of Public Works, stated it appeared that many Members were frustrated by the input of the Department because many questions were about the land reform process. The high level panel discussion of last week should have been combined with the Department’s presentation, including other relevant committees. The land reform process had many pillars. Land restitution had to do with communities making claims. Many of the communities could not prove their claims because documents were missing and anthropologists and historians were called to provide evidence. It is a complex process. Problems could not be solved by returning the land only. Claimants were choosing money instead of land. DPW was just facilitating land restitution. Land redistribution was about identifying land and moving forward, and had nothing to do with the past. What needed to be introduced was a land redistribution policy, which would focus on agriculture and other areas.
Deputy Minister Cronin further stated the security of tenure was critical. The majority of people in the country did not have security of tenure in their country of birth. There was no need for people to have title deeds only because for many South Africans a house was not a commodity, but a home. He pointed out there was confusion around the 1.9 million hectares of land. There were 30 000 land parcels. The majority of the properties were in the asset register of the Department. The problem was on the evaluation of idle land. The Department was now starting to identify parcels of land for the Department of Human Settlements. DPW was dealing with settled claims and claims that were to be settled. The Department was going to meet its targets by end of March 2019.
Deputy Minister Cronin said the public has been given 60 days to comment on the Expropriation Bill. The Department had been given an advice that one government department could not expropriate from another. The advice stated it was better to expropriate from state owned enterprises that have significant pieces of land. That was one category of land that would be expropriated without compensation or below market value, especially if it was not used.
The Chairperson proposed the Department should go back and consider all the questions and comments from the members and come back next week to present a more elaborate document which accommodates the concerns and questions of the Committee. He asked the Department to liaise with the DRDLR on all the issues the Committee raised and what was presented during SONA.
Adoption of minutes
12 February 2019 minutes
The Chairperson took the Committee through the document, page by page.
Ms Masehela moved for the adoption of the document.
Ms Mathebe seconded the motion.
The DA did not support the motion because it stated the minutes were not detailed and therefore could not be a reflection of the meeting.
The majority adopted the minutes with no amendments.
The meeting was adjourned.