LAND REFORM: REPORT EXPANDS LIST OF LIKELY TARGETS FOR EXPROPRIATION WITHOUT COMPENSATION

This article appeared in the 29 July edition of Legalbrief Today, under Policy Watch

While the presidential advisory panel on land reform and agriculture report released recently lists situations in which land could be targeted for expropriation without compensation, it is envisaged that the revised Expropriation Bill will provide the required level of detail on each. Against that backdrop – and building on sub-clause 12(3) of the draft Bill released last year for comment – the report refers to ‘land already occupied and used by labour tenants and former labour tenants’; informal settlements; ‘inner city buildings with absentee landlords’; abandoned land; ‘hopelessly indebted land’; land held purely for speculative purposes; unutilised land held by state entities; land obtained through criminal activity; and farm equity schemes.

Noting an ‘emerging interest’ among private land owners in ‘goodwill’ donations, the report recommends that this, too, be considered a form of expropriation without compensation. With that in mind, a voluntary land donations policy is being drafted with input from National Treasury, the Department of Trade & Industry and the Department of Agriculture, Land Reform & Rural Development. Tax exemptions and the policy’s ‘correlation’ with empowerment legislation are apparently the only matters still requiring attention.

Against that backdrop, regarding possible amendments to section 25 of the Constitution the report proposes a new sub-section (2)(c), requiring Parliament to ‘enact legislation determining instances that warrant expropriation without compensation for purposes of land reform envisaged in section 25(8)’. This appears to be a reference to the revised Expropriation Bill. The report also alludes to a provision in the Constitution itself ‘strengthening’ measures already in place for protecting farm dwellers from ‘inhumane and widescale evictions’. Given that a moratorium on land evictions would undermine section 25(1) provisions protecting land owners from the arbitrary deprivation of property, this appears to have been ruled out. Interestingly, the report also alludes to ‘myriad … shortcomings’ in a draft Regulation of Agricultural Land Holdings Bill released in March 2017 for comment. These include its focus on agricultural land, ‘the concept of land ceilings’ and related proposals for the redistribution of any excess land. ‘Further studies’ are recommended in this regard.

Several other pieces of urgently required new legislation are mentioned in the report: a National Land Reform Framework Bill or Land Redistribution Bill (among other things prioritising ‘competing needs for land’); a Land Records Bill (to formalise and record off-register property); a Restitution of Land Rights (General) Amendment Bill and Restitution of Land Rights (Judicial) Amendment Bill (to address what appear to be the Act’s numerous shortcomings); a Protection of Informal Land Rights Bill (also dealing with rights under customary law); and a Land Court Bill (to strengthen the adjudication process in the context of disputes over land restitution, distribution and expropriation). As Legalbrief Today has already reported, Justice & Correctional Services Minister Ronald Lamola’s recent political overview of the work of his two departments prioritised the Land Court Bill, which is expected to be tabled in Parliament ‘soon’. 

Given that, according to introductory remarks from advisory panel chair Vuyokazi Mahlati, ‘the people have voiced their impatience’ and that prevailing inequalities ‘are threatening peace and stability’, the length of time likely to be taken drafting, processing and implementing all this legislation is worrying. Other recommendations in the report point to the need for urgent attention to a raft of equally demanding imperatives, including agrarian and social reform. This is noting that if ‘social issues’ directly impacting on the quality of life of most South Africans are not addressed, the land reform programme will fail. However, beyond somewhat superficially referring to a ‘land reform fund’ and its possible ‘sources of capital’, the report is largely silent on the practicalities of how the entire ambitious programme will be financed. It is nevertheless made very clear that – as ‘one mechanism’ for enabling land reform – expropriation without compensation will not, on its own, release land on the scale required.

COMPETITION ACT AMENDMENTS UNPACKED

This article appeared in CompliNEWS on 19 July 2019

The 2018 Competition Amendment Act – several key sections of which came into force recently – ‘is evidence of government’s continued commitment to drive economic transformation and inclusion’, according to Trade & Industry Minister Ebrahim Patel. In a media statement on the sections concerned, the Minister singled out ‘a number of new definitions’ along with changes to section 8 of the principal statute, dealing with the abuse of dominance; section 10, dealing with exemptions; section 12A, dealing with the ‘public interest consideration during mergers’; sections under Chapter 4A, dealing with market inquiries; and section 59 dealing with penalties for offences. According to the statement, sections of the amendment Act not yet operationalised ‘will be phased in’ – beginning with those providing small businesses with remedies against price discrimination by dominant firms and the abuse of power by dominant buyers. These provisions are expected to be in effect ‘by November’, in anticipation of which the necessary regulations will probably be released in draft form soon for public comment.

In an article published in Mondaq, Fasken’s Johan Coetzee, Neil MacKenzie and Stuart Strachan unpack ‘some of the more notable amendments’ now in force:

  • The public interest ground sees consideration being given to ‘the promotion of a greater spread of ownership … to increase the levels of ownership by historically disadvantaged persons and workers in firms in the market’.
  • ‘The test for excessive pricing has been reformulated …, although it is largely reflective of existing case law. It has been explicitly stipulated that where it can be shown by the (Competition) Commission that the price charged by the dominant firm is prima facie excessive, the onus shifts to the dominant firm to prove that the price is reasonable.’
  • Regarding predatory pricing, ‘the scope of possible cost benchmarks has been amended to include average avoidable cost and average variable cost, in order to allow for a more accurate assessment of exclusionary behaviour’.
  • Margin squeeze … has been included in the list of specific exclusionary acts.
  • All contraventions are now ‘subject to a penalty of 10% of a firm’s annual turnover’, while ‘an administrative penalty of 25% of a firm’s annual turnover’ may now be imposed for a second offence.
  • Market inquiry proceedings will focus on market structure, observed market outcomes and conduct adversely impacting on competition. ‘Critically’, according to the article, the Competition Commission ‘will be able to take any remedial actions … it considers to be reasonable and practicable’ – other than divestiture, which can only be imposed by the Competition Tribunal. The commission’s findings and actions will be binding, unless challenged in the Tribunal.
  • Exemption provisions in the principal statute now include an additional ground: ‘to promote the ability of effective entry into, participation in or expansion within a market by small and medium businesses or firms controlled by historically disadvantaged persons’; ‘for the economic development, growth, transformation or stability of any industry designated by the Minister’; and ‘for competitiveness and efficiency gains that promote employment or industrial expansion’.

NATIONAL HEALTH INSURANCE: THE BUILDING BLOCKS

This article appeared in the 17 July edition of Legalbrief Today, under Policy Watch

While the yet-to-be-tabled National Health Insurance (NHI) Bill is being processed in Parliament, ‘the structure of the national Department of Health will be reorganised’ and a dedicated NHI implementation unit established. The official version of Health Minister Zweli Mkhize’s recent budget vote speech describes the unit as an ‘embryo’ NHI fund and staff capacity-building platform. Unfortunately, the speech was only published on the department’s website several days after being delivered, which may explain why the mainstream media overlooked so much valuable information provided by the Minister on government plans for preparing public health facilities to implement the long-awaited system. As has been widely reported, Mkhize provided no information on the primary source of revenue for NHI. However, he did refer to a ‘social compact’ on building a health system fit for its implementation. It was one of the outcomes of last October’s presidential health summit.

Mkhize also confirmed that, as the ‘backbone’ of a national electronic health patient record system, a registration system has been developed on which the details of ‘all South Africans’ are expected to have been captured by the end of the 2019/20 financial year. According to the Minister, nearly 43m users have already been registered. With the aim of improving management and governance, within the ‘next six months’ the organograms of all state-run health facilities are expected to have been reviewed and the system of delegating responsibility ‘adjusted to ensure appropriate levels of authority for effective decision making’. In addition, EU funding and bilateral agreements with Japan, the UK and France will be used to ‘build the capacity of managers to implement NHI’. In this regard, Mkhize mentioned ‘twinning arrangements’ also involving ‘academic institutions’.

Conceding that ‘it will be impossible to convince the public about the virtues of NHI unless the health infrastructure is rebuilt as a matter of urgent priority’, the Minister said a ‘team of experts in finance and health … infrastructure’ has been established ‘to seek creative financing mechanisms’ and ‘alternative’ delivery models. According to Mkhize, the team’s ‘clear directive’ is to ‘accelerate the refurbishment of all old hospitals and clinics and deliver new ones within five-to-seven years’. While a ‘significant amount’ has been budgeted for this, in the Minister’s view it is ‘grossly inadequate’. Nevertheless, the ‘entire’ infrastructure build programme has been costed – informed by an audit of all public health facilities. ‘Preliminary indications are that … (it) is feasible,’ the Minister said.

Writing for the Daily Maverick (and drawing from the department’s 2019/20 annual performance plan) the Bhekisisa Centre for Health Journalism’s Laura Gonzalez reported that, initially, it is envisaged that, from 2021, the fund itself will be used to purchase a ‘basic package of services’ from both private and public healthcare providers. Over time, a ‘comprehensive package of services’ will be made available from regional and tertiary hospitals ‘in selected districts’. According to Gonzalez, these services could form the building blocks of ‘a basic medical aid option’ along the lines of one apparently being considered by the Competition Commission ‘as part of its four-year investigation into the private healthcare sector’.

‘DUAL’ MANDATE FOR SARB A POSSIBILITY?

This article appeared in the 8 July edition of Legalbrief Today, under Policy Watch

South African Reserve Bank (SARB) governor Lesetja Kganyago has confirmed that his counterpart in New Zealand (NZ), Adrian Orr, has been invited to SA ‘because of excitement in some circles’ about a recent amendment to its mandate – which, since 1 April this year, has been to ‘protect price stability … while also supporting employment growth’ (Fin24). Kganyago revealed this recently during a business breakfast in Johannesburg, when he also drew a clear distinction between the issue of the SARB’s ownership and that of its mandate. In Kganyago’s view, by ‘conflating’ the two issues and introducing the controversial matter of ‘how to deal with inter-governmental debt’, the ANC leaders concerned (Reuters) have turned the debate on the central bank’s ownership into ‘a Trojan horse’: something that is not what it appears to be’, a ‘zombie discussion … impervious to facts’.

The mandate of the NZ Reserve Bank (NZRB) was changed ‘to address emerging policy challenges, … operate with greater transparency and accountability … (and) reinforce … (the bank’s) societal legitimacy’ according to Orr. Because his country enjoys ‘low and stable inflation, low unemployment, and broad financial stability’ – and has prospered for 30 years – the new, dual mandate appears to have been prompted more by its government’s obligation to offer ‘a coherent and unified response’ to potential global financial crises such as the one in 2009 than by any domestic challenges. Historically, the NZRB ‘has always taken labour market developments into account while formulating monetary policy’.

Last Wednesday, during a meeting of the National Assembly’s Trade and Industry Committee, Minister Ebrahim Patel provided members with a comprehensive analysis of the structural constraints facing SA’s government as it grapples with the challenge of formulating policies to stimulate ‘faster, inclusive (economic) growth’. One is that the country’s labour force (people of working age, including the unemployed) has grown by 134% since 1996. According to the Minister, this growth has been fuelled largely by more women and young people looking for work instead of remaining at home or participating in SA’s subsistence economy. During the same period, employment opportunities grew by 84%, but not enough to absorb the significantly higher labour force. The Minister also referred to the mismatch between available skills and those for which the demand across business is high.

It is against that complex backdrop that, when asked on Friday if monetary policy and ‘the limited mandate of the SARB’ has impacted negatively on growth, Kganyago is reported to have emphatically blamed the ‘contraction’ in GDP during the first quarter of 2019 (Business Day) firmly on ‘electricity constraints’, ‘strikes in the mining sector’ and ‘construction sites hijacked’. ‘You can’t solve that with monetary policy,’ Kganyago told guests at the business breakfast, adding – possibly with justifiable frustration – that ‘it just doesn’t work that way’. ‘Employment is an outcome of growth. South Africans speak about jobless growth but it’s a useless statement. When this economy was growing, you had jobs.’ The question asked of Kganyago should surely have been, ‘What, if anything can the experience of NZ as a developed economy contribute to the debate?’