As a simple homeowner, close to retirement, here are my thoughts on the impact of the policy of Expropriation Without Compensation (EWC) on my life.
I do not trust the African National Congress (ANC). Every promise they ever made to grow the economy and to create jobs has been broken. That party has practices that destroy any incentive for people in South Africa to work hard, achieve merit, save, accumulate for their families, create businesses, and to feel respected by administrators at every level.
I fully expect the ANC to abuse the rights given to government in terms of the new Expropriation Act and an enabling change to the Constitution.
Because I do not, in fact, cannot, trust the ANC I will not invest in this country while they govern. As a simple salary earner my ‘investment’ is not grand, but my sentiments and my actions are repeated thousands of times over and cumulatively result in a bigger effect on the economy than the cancellation of the planned growth strategies of a couple of major multinationals. I do not try to spite the ANC, I just fear for their carelessness with the lives of everyday South Africans.
I, for example, will not upgrade the kitchen of my home or build a garage, both of which I need, because I have certainty that:
- my property will not experience an equivalent increase in value as people with money stay away from assets that may be expropriated without compensation;
- I will need all the savings I have to find alternative accommodation in case my house is expropriated without compensation;
- the ANC will also mess with my pension fund so I need to preserve all the savings I have; and
- Even the small business I helped sponsor is not safe because the ANC includes absolutely anything in its definition of property, not only land.
By hesitating about my little investment of maybe R100 000, I am withholding from the economy:
Roughly that 50% of any construction expense which goes towards labour. So there is R50 000 that I do not spend which means no work for a month for 4 people, and no income for their families, and reduced income for the shops where they buy food and other items, reduced income for taxis and trains, no contribution to school fees, and additional burdens on the state for social grants and health care.
There is R50 000 that I do not spend on materials. That means fewer trips for the delivery guy who still has to pay the hire purchase costs of his second-hand bakkie, and less turnover for the hardware store who will have to cut staff and inventory. The hardware store chain will rent less property which means less business for estate agents, lending banks, builders, and cleaners. The few materials I do not buy will mean less sales for the local factory and therefore fewer jobs in those industries. When their sales fall below critical levels they will give up manufacturing and simply import the goods they wish to sell. And why should they fight to sustain their factories because they could also just be expropriated without compensation; it is better not to own assets at all.
My dear friends at SARS should be appalled by the disincentives created by EWC. Already, because I do not spend R50 000 on materials there is R7 500 they do not receive in VAT from the hardware stores. There is also a further couple of thousand, let us say R10 000, that is not contributed to PAYE, SETAs and UIF, assuming the construction crew were so registered. And all the way down the line, every business and entity in the value chain will have a little bit less to contribute to the fiscus.
So far, my lack of trust in the ANC has seen R100 000 that is not invested, R100 000 by which the economy does not grow, and a direct cost to the fiscus of about R17 500. It has caused a further reduction in employment and a further cost to the government’s formal social welfare network and to the informal family (or Black Tax) support systems.
Let us say there are a million people who think like me. Not that many out of a population of 60 million, but significant because there are probably not more than about 2 million people in the whole country who could even contemplate spending R100 000 on home improvements. For some the expenditure of R100 000 could be the building of their first house, for some it could be the building of shacks in their back yards to get some rental income, for others it could be investing in a printing machine to start their own business.
Multiply the figure R17 500 x 1 million = R17,5 billion less money for the government.
Then there is the extra cost to the government of four unemployed people who are unable to support families of, say, six persons each; or 24 people requiring social grants. If those grants were R350 per month on average, that would be a cost to government and therefore all payers of tax, including VAT and petrol tax, of R8 400 per month due to a valid suspicion of the ANC, or R8,4 billion for the month if a million people felt the same way.
R17,5 billion not going into the economy and an extra R8,4 billion going out.
Repeat the figures many times over for large local business and potential foreign investors and appreciate why we are depressed.
What kind of government does things this way? Stupid, one might say, but let us look what they want to achieve with this policy of EWC. They want to right the wrongs of the past.
So they allocate R6 billion or more per year for the last twenty years to do the same thing – land restitution, but waste most of it and don’t spend the rest. The attraction of big budget government expenditure items is like the smell of a turd to a swarm of flies for the corrupt. The opportunities for abuse are already loaded into the proposed legislation by severely restricting the ability of anyone whose property is designated for expropriation to mount a practical and accessible defence before the courts.
We need to remember that this EWC legislation is the result of a motion passed at the ANC conference at Nasrec in 2017. There were about 4 700 delegates, so even if they unanimously voted for EWC that is about 0.015 % of the eligible voting population of SA of about 31 million. Put another way, if every one of those delegates was a property owner, however unlikely, they would also only represent less than 0.5% of all households in South Africa.
Hence, we have the ANC, using its internal resolution at its own party conference, to decide what happens to the property of the other 99.5% of the population.
If you are also sick of them stuffing up our lives with screwed-up policies, decide now to vote them out. Their absolute fetish with the past is destroying the future of everyone (except the politico fat cats who thrive on it).
I would love to build the garage I need and upgrade my kitchen, I would love to pump up the economy and help create jobs, but it won’t happen while they threaten my decades of hard work with destructive legislation like EWC.
[Image: unsplash.com, @brett_jordan Source: Depositphotos]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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