News reports over the past weeks have suggested that the ANC and EFF have reached an impasse over the proposed amendment to Section 25 of the Constitution.
At issue, apparently, is the question of state custodianship of land. The EFF demands that the state should exercise this power over all land in South Africa, while the ANC’s position is that this should apply to ‘certain’ land.
We at the Institute of Race Relations have for years sounded warnings that a custodial seizure – the effective nationalisation – of land is the likely end-point of this policy drive. We note the disavowal of custodianship by Justice and Correctional Services Minister Ronald Lamola, and his recognition that this is neither a productive path to travel nor one that is supported by South Africa’s people. We believe, however, that custodianship remains very firmly on the table.
These thoughts prompted some reflection on a piece that appeared on the News24 platform in late June on the matter. Written by Peter Meakin, a professional valuer, it was a defence of custodianship, and a proposal for an alternative land ownership regime for the country. A cerebral and innovative consideration, it deserves a response.
Meakin’s argument appears to be that rather than fighting Expropriation without Compensation (EWC) of land by the state, we might actually welcome it, as it would enable the revenue system to be revamped. Steep rates and taxes would be levied on land, while income tax and VAT would be scrapped. This would then generate revenue equivalent to what is currently taken in, while giving South Africa a massive competitive boost through the elimination of other taxes.
Concern about EWC, he says – likening it to the Salem Witch Trials – has an air of moral panic about it.
Multitudes of households
Leaving aside normative questions of what this means for private property rights and its implications for those multitudes of households who aspire to owning their own piece of land (among other things), I must admit to finding something very intriguing and elegant in this. At the very least, it is a point of debate. But it is difficult to see this working with things in South Africa as they are.
True enough, Meakin’s argument is directed at the Democratic Alliance, and the party’s opposition to the EWC drive; but this policy is being pushed – with great energy and political investment, irrespective of the current ambiguity around its position – under the auspices of the ANC. Its record and political orientation cannot be divorced from consideration of these ideas.
There is some very vocal support for a custodial seizure of land within the ANC and government, with senior figures in both having articulated this position. As noted, the ANC has subsequently explicitly included custodianship in its preferred formulation for the amendment of Section 25. One might add that the 2017 land audit recommended that custodianship of all land be accompanied by land taxes.
This has an echo of Meakin’s recommendations.
I would caution, though, that there is a world of difference between the objectives and trajectory that he evidently has in mind and those envisaged by the ANC. Meakin’s approach seems to be that the sacrifice of property in land would fortify private enterprise and investment elsewhere; the ANC’s is that the state has an a priori claim on resources, which it would then manage on behalf of a grateful population.
Most obviously, there is no chance that land rents will be substituted for any other revenue stream. The scale of the government’s ambitions, and the imperatives of maintaining its patronage network, will not countenance that. In other words, we would advance down this road on the understanding that land rents would be collected in addition to everything else.
Already inadequate
The various taxes levied – his argument that these amount to a form of EWC is fair enough – are already inadequate to cover current expenditure, and hopelessly so to deal with what it intends for the country. It now requires assets and their rents as well.
Land certainly is in the state’s crosshairs, but not only land.
The health crisis has sharpened the debate around the proposed National Health Insurance scheme. This will demand, by minimal estimates, around R250 billion above current spending – probably far more. It has never been explained how this will be funded, and some surprise has arisen about suggestions that the state might nationalise medical aid funds. This is pretty much the inevitable course on which we are set.
The EWC agenda will in all likelihood be extended to any number of fields. A Constitutional Amendment (its current complications notwithstanding), a new Expropriation Bill, and the precedent established by a custodial taking of land would provide a formidable case for doing so.
Land reform: The ANC’s expropriation without compensation dilemma
As for the management of land under state custodianship, one might look at the state of minerals or water resources for an indication of its future. This is not encouraging. The success of Meakin’s proposal would, it’s fair to believe, hinge on a capable state that actually had sound instincts for economic and developmental rationality. This is simply not the case in South Africa at present, nor something that is likely to emerge in the foreseeable future.
So while I tip my hat to Meakin’s recommendation as an intellectual exercise, the realities of South Africa strongly argue against the advisability of any prospective solution grounded on EWC and custodianship. In the current context, this is a concerning prospect and requires forthright opposition.
