The Second Phase in Overview
Anthea Jeffery
Head of Policy Research, IRR,
Solidarity National Council, 26
May 2014
Key NDR goals/strategies
•
Eliminate
‘apartheid’ [I.E. existing] property relations
•
Apply affirmative action until ‘all
centres of power and influence became broadly representative of the country’s
demographics’
•
Use cadre deployment to bring all
‘centres of power’ under the control of the ANC, including the Judiciary, the
media, and civil society
Erosion
of property rights
•
1993 Constitution
•
Expropriation for public purposes
•
Compensation as agreed or decided by courts
•
in terms of listed criteria (value of investments)
•
1996 Constitution
•
Expropriation also in ‘the public interest’
•
Different criteria for compensation
•
‘public interest includes nation’s commitment to land
reform’ and other reforms
Land
reform
•
Restitution, redistribution, tenure reform
•
Shifts in 30% goal
•
Restitution process to date
– slow,
inefficient, ‘more damaging to commercial agriculture than the
Anglo-Boer war’
– ineffective
in providing redress
– 91%
of claimants have chosen cash instead
– 90%
of transferred farms have failed
Changes
now being made
•
Green paper on land reform
•
Leasehold title, not freehold, for beneficiaries
•
Freehold title with limited extent
– Strategic
Plan for 2014-2019, identifies
– bills
or policy documents to be taken further:
– ‘Agricultural
Land Holdings Policy Framework’, which will introduce ‘upper and lower limits’
on the size of agricultural land holdings.
•
Restrictions on foreign ownership of land
– ‘Acquisition
and Disposal of Land by Foreign Persons Bill’
– limits
on land sizes for foreign nationals’
– ‘long-term
leases’ for foreigners
•
‘Institutionalised use rights’ for land in traditional
communal tenure
– More
powers for chiefs, key to rural vote
Re-opening
of restitution claims
•
Bill is with President Zuma for his assent
•
Claims re-opened till June 2019
•
379 000 new claims, could cost R179bn to settle
•
EFF wants State to take land as custodian, and lease
it to users for 25-year periods
•
This could also
be the ANC/SACP objective (state ownership will break power of white
capital)
Promotion
and Protection of Investment Bill of 2013
•
Two key clauses:
•
Expropriation must take place in accordance with the
Constitution
•
ie for public purposes, or in the public interest
•
against ‘just and equitable’ compensation
•
paid in ‘a timely manner’
•
But there’s another vital clause as well
Some
acts are NOT expropriation
•
The Bill has an open list of acts by the State which
‘do not amount to acts of expropriation’. These include:
•
‘any measure which results in the deprivation of
property but where the State does not acquire ownership of such property,…
•
provided there is no permanent destruction of the
economic value of the investment’
Implications
of Investment Bill
•
Under the Investment Bill, the Government could use
its rules to take further measures to
•
vest farming
land under claim, plus farm equipment and other assets, in the State as the
custodian of the nation’s land resources,
while
•
simultaneously
inviting claimants to apply to the State for a licence or lease to use portions
of these farms for a specified period.
Implications
of the Investment Bill
•
Farmers would
be deprived of their property, but
•
the State would
acquire it as custodian rather than as owner, and
•
there would be
‘no permanent destruction of the economic value’ of their farms, which would
continue to be used by others. Hence,
•
there would be
no ‘act of expropriation’, and
•
no compensation
would be payable.
•
Provided the State takes land under claim as a
‘custodian’ for land claimants, no compensation will be payable.
•
State likely to become the ‘custodian’ of more and
more land
•
Together with other policies in the Green Paper, this
will give rise to creeping land nationalisation
•
Ironically, black South Africans will again be barred
from freehold title
Investment
Bill based on
key ConCourt ruling
key ConCourt ruling
•
Majority ruling by Chief Justice Mogoeng Mogoeng in Agri
SA v Minister of Minerals and Energy
•
Sebenza (Pty) Ltd had bought unused coal mining right
in 2001 for R1m, and could not afford to convert it to new order mining right,
after MPRDA came into effect in 2004
•
Its unused right ‘ceased to exist’ a year later
Judge
Mogoeng’s ruling
•
A claimant must first show a ‘deprivation of property
at the hands of the State’
•
He must also show that ‘the State has acquired the
substance or core content’ of what he has lost
•
Here, Sebenza had suffered a ‘compulsory deprivation’
of its coal right
•
The ‘custodianship’ of this right was now ‘vested in
the State’ on behalf of the people
•
Had this assumption of custodianship given the State
ownership?
•
‘The answer is no.’
•
The State, as custodian, is simply a ‘conduit through
which broader and equitable access to mineral…resources can be realised’
•
Ie, there had been a deprivation of ownership, but no
matching acquisition of ownership by the State
•
This meant there had been no expropriation
•
This meant no compensation was payable
•
Edwin Cameron: ‘Acquisition by the State is not…
inevitably…a necessary feature of expropriation’
•
Two other ConCourt judges warned of the implications
of Judge Mogoeng’s ruling, saying:
•
It could lead to ‘the abolition of the private
ownership of…all property’
without the payment of any compensation.
Implications
of ConCourt ruling
•
This is “pure logic chopping”, says Martin Brassey SC.
•
The ConCourt has also “endorsed a regime in which a
private person can be licensed enter property against the owner’s will, build
access roads and set up a rig, explore for minerals and then, using the water
and other materials on the property, win the minerals for his own benefit and
account.
•
“The owner will not be compensated, but the State can
impose taxes and demand royalties on the mining company in exchange for the
permit”.
Erosion
of Mining Rights
•
Private ‘old-order’ mining rights abolished under
MPRDA of 2002
•
Replaced (not always) by 30-year licences, revocable
by minister for failure to implement social and labour plans or mining charter
•
Charter requirements tightened up in 2010
•
Many new restrictions under MPRDA Amendment Bill of
2013
More
ministerial powers
•
Set percentages of designated mineral products to be
made available for local beneficiation in ‘prescribed quantities, qualities and
timelines’, at ‘mine-gate’ or ‘agreed’ prices.
•
Impose export controls on designated minerals
•
Probably impose both export and price controls on
‘strategic’ minerals
•
Bill also increases risks of ‘gazumping’, and makes
for permanent environmental liability
New
penalties
•
Fines of up to 10% of annual turnover, plus 10% of
value of previous year’s exports, or prison terms for up to four years, or
both, for:
•
infringing export or price controls
•
failing to expand opportunities for blacks or promote
‘optimal economic growth’
•
failing to implement social and labour plans
•
failing to comply with mining charter
Erosion
of Oil Production Rights
•
MPRDA Amendment Bill ‘entitles’ the State to
•
20% free carried interest, plus
•
‘a further participation interest’, of an unspecified
percentage, to be acquired ‘at an agreed price’
•
Previous proposed ceiling of ‘50% per petroleum
operation’ has fallen away: 100% now possible
•
State also entitled to ‘a corresponding percentage of
voting rights’
Changes
to BEE rules
•
BEE Amendment Act, gazetted, not operative
•
Penalises ‘fronting’ as very broadly defined
•
Ie ‘directly’ or ‘indirectly’ (unintentionally)
‘undermining’ BEE objectives
•
Punishable by fine of up to 10% of turnover, plus jail
for up to 10 years, plus ban on state contracts for 10 years
New
BEE generic codes
•
Need 40% of ownership points, via 40% discount on
market value, for all but exempt micro enteprises (annual turnover below 10m)
•
Unrealistic EE targets eg 60% black representation for
senior managers, when economically active Africans aged 35 to 64 make up only
36% of overall economically active population
•
Unrealistic procurement obligations
•
80% of annual spending
•
Much of it from 51% black-owned firms who are also
‘empowering suppliers’
•
‘Supplier and enterprise development’: (3% of NPAT)
must also go to 51% black-owned firms
•
5 points only for socio-economic development, even for
qualifying small enterprises (25 points now)
Employment
Equity Amendment Act
•
Gazetted, not yet operative
•
Removes defences (eg size of ‘pool of suitably
qualified people’, economic factors)
•
Shifts onus from DoL to employer
•
More than triples penalties
•
Failure to fulfil racial targets: R1,5m or 2% of
annual turnover for first ‘offence’; R2.7m or 10% of annual turnover for fifth
in three years
EE
Draft regulations
•
Larger employers (150 or more) must use
– national
demographics for top and senior managers, plus professional staff (11% v 51%
for coloured people in Western Cape)
– average
of national and regional for all other staff, including unskilled (31% v 51%)
•
Other designated employers (50 to 149)
– National
demographics at top and senior levels, regional ones elsewhere
Women
Empowerment etc Bill
•
All employers of 150 people or more designated by
minister
•
At least 50% representation of women in
‘decision-making structures’ and boards
•
Plans and implementation measures to minister, who can
‘recommend’ improvements
•
Fine of up 10% of annual turnover, plus 5 years in jail,
for failing to supply information or comply with recommendations
Other
worrying measures
•
Property Valuation Bill (to president for assent)
•
Infrastructure Development Bill (to president for
assent)
•
Expropriation Bill of 2013 (now to Parliament?)
•
‘Final policy proposals’ on farm redistribution
– 50%
to farm workers, proceeds paid by State to ‘investment and development fund’
– precedent
for other types of businesses?
•
Land Tenure Security Bill of 2010
•
Security Industry Bill (to president for assent)
•
Legal Practice Bill (ditto)
•
Protection of State Information Bill (ditto)
•
Labour Relations Amendment Bill (ditto ?)
•
Employment Services Bill, gazetted
•
December 2014 deadline for compliance with revised
mining charter (realisation principle)
•
Increase in strikes and violent protests
NDP
or NDR?
•
Mr Zuma post election: time for NDP
•
Mr Zuma pre election: time for ‘a radical new phase’
of ‘socio-economic transformation’
•
Also pre-election: Now we have achieved political
freedom, ‘we must achieve economic freedom and ensure ownership, management,
and control of the economy is further deracialised’
When everyone runs from the bigots who accuse Englishmen of Racism, they ought to look at once beautiful countries with leaders like Mugabe and Zuma for what will happen to Britain in the future. Not that British politicians are much better! Their reaction to being found with their soiled hands in the Cookie Jar was to get rid of a capable administrator - Elizabeth Filkin - and replacing her with an organisation that looks and sound like bottom feeders.
Unless the country opens its eyes soon, the damage done will leave the indigenous races in the same plight as the Boere, the Rhodesian, the Portuguese Angolan and Mocambiquan.
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