Pressly: Robin Hood-esque Land Bill badly timed – another own goal
The Land Bill has come under scrutiny from all sides. The Economic Freedom Fighters don't agree with compensation in return for the land, while commentators have said the whole process was pushed through without enough consideration to the consequences. The timing of the bill also comes into consideration, especially as the country is staring a recession in the face, while ratings agencies S&P and Fitch are due to meet this week to decide on the country's sovereign debt. With junk a very real possibility, if not now then quite possibly in six month's time. And with elections on the horizon, it may be another attempt to garner some much needed last minute support for the ANC. But this could very much turn out to be another classic own goal as Donwald Pressly, editor of the Cape Messenger, adds his voice to debate. He says it sends the wrong signals just at a time when South Africa needs to be assuring investors – both local and foreign – that their money won't be chucked out of the window or stolen from them. Another good read. – Stuart Lowman
By Donwald Pressly*
Just in the week that embattled Finance Minister Pravin Gordhan implored South Africans not to listen to harbingers of bad news about the economy – saying that the Moody's recent decision not to downgrade should be viewed as wonderfully encouraging – the governing party and its allies shoot the country in its collective economic foot.
The passage of the Expropriation Bill is thoroughly bad news for the economy and for local and foreign business confidence in South Africa. Of course, Cosatu says those who oppose it – being the Free Market Foundation, the SA Institute of Race Relations, and the Democratic Alliance – are harking back to the apartheid era expropriation processes. Of course, that is just political rhetoric which has to be ignored. Bringing out the race card for every argument has lost its currency.
This new legislation, according to Cosatu's parliamentary coordinator Matthew Parks is in line with the constitution and the national aims of decolonization and transformation. To quote his statement: "Cosatu strongly supports its progressive provisions which will enable government to expropriate land and other property in support of the constitutionally provided objectives of land reform, addressing the legacies of apartheid and colonialism." It is in reality, unfortunately, a mechanism where people with just some assets can be fleeced of them simply because they are richer, (likely to be white or coloured and Indian). They stand to lose their property, land and even investments or even pensions. That is because the definition of property in the legislation is too wide for comfort.
Dr Anthea Jeffery of the SA Institute of Race Relations hits the nail on the head. This law has the idealistic Robin Hood-esque proposal to "take from the previously advantaged", she noted over a year ago. It appears romantic and, one hopes, that is the government's intention. But realistically, Jeffery points out, the bill opens the door to government being able to take any land up front, at any time, for any reasons from any person with no clear enforcement of compensation for that land.
The DA's Anchen Dreyer pointed out in Parliament that the interpretation of the Bill "stretches far beyond immovable assets and includes assets such as pension funds and cattle, which could potentially also be expropriated". This could affect not only the rich, not only the middle class but also ordinary South Africans.
No guarantee that outstanding bank loans will be paid off
Taken to its logical conclusion there is no guarantee in the Expropriation Bill that compensation paid for expropriated property would cover outstanding bank loans. So if you have paid R100 000 off your farm costing R1 million, you could end up having to continue to pay the remaining R100 000 outstanding bond even though your farm is no longer in your hands. (That is assuming that you get 80 percent compensation of the land value as suggested). Such expropriation would not only be unfair to anyone of whatever colour and class position, it would constitute theft and, likely, impoverishment of the victim. So what this will achieve is the impoverishment of the previously advantaged.
There is considerable concern that property expropriated and placed under state guardianship could be done without compensation at all. Although this is intended for land which is lying fallow, it is obviously deeply concerning that it could be used to rob farmers in particular of their land. The danger is that this law could also be applied to unused urban land.
It is a thoroughly unconstitutional Bill, whatever Cosatu has to say about it. As Dreyer points out it is hardly a bill that is going to impress foreign investors, but perhaps more importantly, it has the potential of stopping ordinary South Africans from investing in new ventures, buying new land or even investing in a retirement annuity. It is a legislative madness that will not only drive away rich investors, but anyone who doesn't want to pour their money down the drain.
- Donwald Pressly, Editor of Cape Messenger.