The news — albeit belated — that the Ekurhuleni municipality has expropriated the 34ha Driefontein Farm worth R30m-R64m for zero compensation, has put paid to the pretence after the post Trump-Ramaphosa Oval office debacle that expropriation without compensation (EWC) was not really happening, or was not going to be so bad.
It is obvious that the national democratic revolution (NDR) and MK-leaning factions of the ANC are using this as a test case, and if they succeed it will be open season for every municipality or government entity to take any land anywhere, regardless.
So yes, it is right and necessary that the Driefontein expropriation and the 2024 act be contested in the courts, but even if they are overturned, will it be enough? The MK party’s Mzwanele Manyi has introduced a bill in parliament seeking, inter alia, to abolish private land ownership and place all land under state custodianship.
On the face of it this will not succeed but, once again, will this be enough? We all know the answer to this one. Since it will merely maintain the status quo, informal settlements, land invasions and populist demands will increase. Even more important, nothing fundamentally addressing the spatial injustices of apartheid will have been accomplished.
So, are there not better ideas than simply opposing EWC? Among many there is indeed a no-brainer arising out of a fact highlighted recently by Agricultural Business Chamber of SA chief economist and Business Day columnist Wandile Sihlobo — the SA government has acquired under restitution about 2.5-million hectares of land that has not yet been transferred.
Spatial inequities
Would it not be a golden opportunity for organised agriculture and government together to find, support and establish suitable candidates on this apparently idle but valuable land?
We have the bizarre phenomenon of vacant stands in leafy suburbs, combined with slums and shacks on the fringes.
However, even if successful this would not move the needle on the real challenge, which is the spatial inequities of apartheid in and around our cities and towns.
In most of them we have the bizarre phenomenon of vacant stands in the often leafy suburbs, combined with slums and shacks on the fringes, as well as often also decrepit CBDs. While it would be useful if municipalities provided data on the number of vacant stands, including those on which the buildings have been demolished so as to reduce the rates burden — or to put it more bluntly, to facilitate land speculation — it is nevertheless obviously substantial.
Site value rating system: a missed chance
Once again, accused number one in this case has to be the ANC, which had a golden opportunity to deal with this phenomenon with the passage of the Municipal Property Rates Act in 2004. Instead of extending to the rest of SA the highly successful site value rating (SVR) system used in Johannesburg and other Gauteng cities, and which Cape Town had decided to adopt, it chose to abolish it in favour of composite rating, whereby rates are payable on buildings as well as land.
Precisely as predicted, especially in Johannesburg where vacant stands were a rarity, the phenomenon of vacant stands commenced and continues to this day. By no means all of them would be suitable for housing, but it would make a significant contribution were SVR to be reintroduced and, equally important, would make land generally more available, with a livelier and more dynamic market.
Reviving growth through SVR
Following the switch back to SVR, or even in anticipation thereof, there would no doubt be a welcome building boom as derelict sites came to life in all SA urban areas. As regards agricultural areas, a modest tax deductible SVR would discourage holding land idle for speculation.
Given that it is a generation or two since the heyday of Johannesburg under SVR it is worth noting for new arrivals that Johannesburg was renowned for its dynamism with the “sleepy” coastal cities being the butt of many jokes.
This was erroneously ascribed to the gold mining industry long after the last mines around the city had closed, but as noted by University of California (Los Angeles) professor Mason Gaffney on a visit to a land tax conference in the early 1990s, Johannesburg was the only sizeable city he knew of on a rocky ridge with no river or harbour to boost trade. He had no doubt that its post gold mines dynamism was due to SVR.
An additional advantage of reintroducing municipal rates on land only and not on buildings is that it would be a pragmatic nuts-and-bolts non-political measure, which even the quarrelsome government of national unity members could agree on.
• Meintjes, a retired equities analyst, is co-author of ‘Our Land, Our Rent, Our Jobs’.
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