Presentation by South African National Parks (SANParks) to the Parliamentary Portfolio Committee on the Local Government: Property Rates Bill (13 May 2003)


NOTE:
At the presentation to the Portfolio Committee on 13 May 2003, SANParks indicated that it would accept an amendment to Section 15(2)(e) to have the Section read as follows:

"any land declared as a national or provincial protected area, excluding any part of such area which is used for private business or commercial purposes;"

This amendment requires deletion of the words "State owned" after "any" at the start of the sentence and the insertion of the word "private" before the term "business or commercial purposes" at the end of the sentence.

Executive Summary

Objective
To ensure that property rating in South Africa safeguards a representative system of national parks, is environmentally sustainable and promotes conservation. This can be attained by effecting a single change to Section 15(2)(e) of the Bill with no significant impact on property rating in South Africa.

Legislative framework
By law, the State is the guardian of South Africa’s protected areas and must promote conservation. The State has agreed to create incentives for conservation and all State decisions that may significantly impact on the environment must be properly assessed before they are implemented.

Rating dispensation
SANParks is presently exempt from payment of any rates because (a) all rates imposed on SANParks would be paid by the State and (b) national parks make a significant contribution to provincial and local economies in their proximity.

Section 15(2)(e) of the Local Government: Property Rates Bill proposes exempting only "any State-owned land declared as a national or provincial protected area, excluding any part of such area which is used for business or commercial purposes" (our emphasis).

This proposed provision is problematic in the following respects:
The limitation of the section to "State owned land" would impose a significant financial burden on SANParks and the State and be detrimental to conservation.
The exclusion of areas "used for commercial and business purposes" is unjustified and would further burden SANParks and the State.

Private land and national parks
South Africa has 20 national parks comprising 3 583 734 hectares. About 250 000 hectares (or 6,98%) thereof is private land contractually incorporated into national parks. Another 250 000 – 500 000 hectares of private land will need to be incorporated into South Africa’s national parks in future meaning that approximately 20% of the land included in South Africa’s national parks will eventually be private land. Private land already incorporated into national parks represents 0,2% of South Africa’s land and in future is unlikely to exceed 0,62%.

It would have cost the State between R750 million and R3,75 billion to acquire the private land already included in national parks and a further R1,5 to R7,5 billion to acquire land still needed to meet the country’s conservation and biodiversity. Neither the State nor SANParks can ever mobilise sufficient resources to meet these acquisition objectives and the only way they can be met is with innovative public:private partnerships.

Incentives to make land available for inclusion into national parks
A comprehensive programme has been implemented to persuade private landowners to make their land available for inclusion in national parks. Indemnification from rating is a cornerstone of, and prerequisite for, this programme.

Potential cost of rating to the State through SANParks
At a rating of 0,001% of property value per annum, SANParks would have to pay an estimated R3,75 million per annum just to retain what it has. An additional R7,5 million per annum could be added hereto for additional land to be acquired. SANParks does not have the capacity to meet this obligation from existing resources.

SANParks and "commercial and business purposes"
SANParks is an organ of state and the State receives all income derived by SANParks. SANParks declares no profit and is limited in its function to a statutory mandate. As a result, no part of a national park is used for business purposes (assuming that "business" by definition entails the intended making of a profit). While commercial transactions are required (and authorised by statute) for SANParks to fulfil its statutory function, those transactions are for the benefit of the State.

As the Section now stands, it could be argued that the charging of an admission fee renders an entire national park "an area used for commercial purposes".

Property rating, increased tariffs and historically disadvantaged citizens
The imposition of rates on any area of national parks would most seriously affect historically disadvantaged individuals who would be effectively excluded as a result of increased fees.

Private developers and concession holders in national parks: the difference
All fixed assets in concession areas vest in SANParks and never become the property of the concessionaire other than in the case of private developers who own the land and assets on which property rates are based.

Payment for municipal services as opposed to property rates
Most, if not all, municipalities separate property rates from service charges. Where national parks do make use of municipal services those can be (and are) charged for and paid for separately from rates.

Submission and recommendation
To comply with the State’s obligation to create incentives for conservation, promote environmentally sustainable development and enable SANParks to fulfil its statutory function it is proposed that the wording of Section 15(2)(e) be amended to read:

"any land declared as a national or provincial protected area;"
To avoid any confusion whatsoever, the definition of "protected area" in the Property rates Bill would also need to be addressed to correspond to the definition in the Protected Areas Bill and ought to read:
National protected area means a national protected area as defined in the National Environmental Management: Protected Areas Act. And
Provincial protected area means a provincial protected area as defined in the National Environmental Management: Protected Areas Act
Environmental consequences of imposing property rates on national parks
The imposition of property rates on any part of the country’s national parks that have previously been exempt from such rating will have a significant impact on the environment that:
By law must be assessed and compared with alternatives before it can be implemented; and
can be avoided if Section 15(2)(c) is amended.

SANParks presentation

1. Introduction

In making this presentation SANParks has the following objectives:

To ensure that property rating in South Africa:
safeguards the establishment and management of a system of national parks that represents the indigenous wildlife, vegetation, landscape and associated cultural assets of South Africa for the pride and benefit of the nation (as is required by the Constitution of the Republic of South Africa (Act 108 of 1996) and the National Environmental Management: Protected Areas Bill);

is environmentally sustainable (as is required by the National Environmental Management Act, 1998 (Act 107 of 1998));

contributes to the conservation of the country’s biodiversity and discharge of South Africa’s international biodiversity obligations in terms of the International Convention on Biodiversity (National Environmental Management: Biodiversity Bill).

As is more fully set out below, this objective can be attained by effecting a single change to Section 15(2)(e) of the Property Rates Bill that does not impact significantly on property rating in South Africa.

This presentation has been adapted from the submission made by SANParks and represents a refinement of the submission made therein.

For purposes of convenience, the Committee will be provided with a CD containing the relevant environmental legislation.


2. Legislative framework for the governance of national parks in South Africa

In terms of Schedule 4 of the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), national parks are an exclusive competence of national government and government is the custodian of the environment.

South Africa’s network of 20 national parks are managed by SANParks in terms of the National Parks Act, 1976 (soon to be repealed and replaced by the National Environmental Management: Protected Areas Act, 2003) and, in addition to its other functions, represents an essential component in South Africa’s biodiversity conservation regime implemented in compliance with the International Convention on Biodiversity through the National Environmental Management: Biodiversity Bill.

The principles and provisions contained in the National Environmental Management Act, 1998 (Act 107 of 1998) are applicable to all decisions and activities of all organs of State that may have a significant impact on the environment (including decisions that will have such an impact on national parks and other protected areas).

In terms of this framework:

the State, is the guardian of South Africa’s protected areas and is constitutionally enjoined to protect the environment for the benefit of present and future generations through reasonable legislative measures that promote conservation and secure ecologically sustainable development;

the State has by international treaty agreed to adopt measures that act as "incentives for the conservation and sustainable use of components of biological diversity" and to provide "financial support and incentives in respect of those national activities which are intended to achieve the objectives of" the International Convention on Biodiversity;

all decisions of all organs of State that may significantly impact on the environment must be approached with caution and must be properly assessed before they are implemented.

3. Present rating dispensation

In terms of Section 18 of the National Parks Act, 1973 SANParks is exempt from payment of any rates or taxes.

The justification for this status quo lies therein that:

SANParks is an organ of State in the national sphere of government;

SANParks’ sole function is to manage, maintain and expand the country’s system of national parks in partial enablement of the environmental rights entrenched in Section 24 of the Constitution for the benefit of the nation (both present and future generations);

South Africa’s national parks are valuable national assets that directly and indirectly contribute significantly to the national, provincial and local economies;

The State receives all income derived by SANParks, irrespective its origin and applies such income in pursuit of SANParks’ statutory mandate;

The State, through the Department of Environmental Affairs and Tourism, is responsible for funding South Africa’s national parks.

As a result, the imposition of rates and taxes on SANParks would mean that the State taxes itself and all rates and taxes imposed on SANParks would be paid by the State.


4. Proposed rating dispensation (Section 15(2)(e) of the Property Rates Bill)

General

In terms of Section 15(2)(e) of the Local Government: Property Rates Bill a municipality may not exercise its powers to levy rates on property to impose rates on:

"any State-owned land declared as a national or provincial protected area, excluding any part of such area which is used for business or commercial purposes" (our emphasis).

This proposed provision is problematic in the following respects:

The limitation of the section to "State owned land" would impose a significant financial burden on SANParks and the State and be detrimental to conservation;

The exclusion of areas "used for commercial and business purposes" does not take into account that SANParks is not a business and engages in commercial activity only in pursuit of a statutory function for the benefit of the nation as a whole.

4.2 The limitation of section 15(2)(e) to "State owned land"

4.2.1 South Africa’s national parks

South Africa has 20 national parks as indicated in the table below:

PARK

DATE
PROCLAIMED

AREA IN
1994

AREA ADDED
SINCE 1994 (Ha)

CURRENT
SIZE (Ha)
(Proclaimed size)

Addo Elephant

1931

51 309

23 030

74 339

Agulhas

1999

0

5 690

5 690

Augrabies Falls

1966

11 743

29 933

41 676

Bontebok

1931

2 786

0

2 786

Cape Peninsula

1998

0

13 450

13 450

Golden Gate Highlands

1963

11 633

0

11 633

Kalahari Gemsbok (now Kgalagadi Transfrontier)

1931

959 103

0

959 103

Karoo

1979

41 047

36 047

77 094

Knysna National Lakes Area

1985

15 000

0

15 000

Kruger

1926

1 962 362

0

1 962 362

Marakele

1993

37 035

13 691

50 726

Mountain Zebra

1937

6 536

18 127

24 663

Richtersveld

1991

162 445

0

162 445

Tankwa Karoo

1986

27 064

16 835

43 899

Tsitsikamma

1964

63 942

0

63 942

Vaalbos

1986

22 697

0

22 697

Vhembe-Dongola

1998

0

5 356

5 356

West Coast

1985

32 361

3 912

36 273

Wilderness

1985

10 600

0

10 600

TOTAL

 

3 417 663

166 071

3 583 734

Note: Only areas proclaimed are listed. In the Cape Peninsula national park for example, over 24 000 ha that have not been proclaimed are managed by SANParks

Private land incorporated and needing to be incorporated into national parks

A total of some 250 000 hectares (or 6,98%) of South Africa’s national parks comprises private land incorporated into national parks by contract. Such contracts secure private land for purposes of creating or expanding national parks without the State having to acquire the land. SANParks manages such land as if it were owned by the State and the landowner cannot exercise any rights that cannot be reconciled with SANParks’ requirements.

Negotiations are presently underway to include a further approximately 30 000 hectares into the system of national parks shortly and it is envisaged that another 250 000 – 500 000 hectares of private land will need to be incorporated into South Africa’s national parks to achieve a broadly representative system of national parks.

Should this objective be attained, approximately 20% of the total land included in South Africa’s national parks will be private land in a public:private partnership of inestimable value, from a conservation, financial and developmental perspective.

In SANParks’ experience, agricultural land appears to have an average market value of R1 500,00 per hectare. Land suitable for incorporation into national parks can be purchased for somewhere between R3 000,00 (Madikwe) and R30 000,00 (Kruger) per hectare (ie. between 2 and 20 times more expensive than agricultural land).

On the most conservative estimate, it would have cost the State R750 million to acquire the private land already included in national parks and a further R1,5 billion to acquire land still needed to meet the country’s conservation and biodiversity obligations.

At an average of R15 000,00 per hectare, land already included would have cost R3,75 billion and ;and still to be acquired will cost R7,5 billion.

Neither the State nor SANParks can ever mobilise sufficient resources to meet these acquisition objectives and the only way they can be met is with innovative public:private partnerships through which private land is made available for incorporation into national parks on a contractual basis and other national and provincial protected areas.

Approach to making private land available for incorporation into national parks – and the cost to private landowners

In accordance with:

the injunction of former President Nelson Mandela (at the SANParks Centenary celebrations) that SANParks promote and build viable partnerships with communities neighbouring protected areas and manage national parks as national assets wisely so that they could ‘help free up government funds to address the hard-pressed health, housing, education and safety and security sectors’;

the requirement of the International Convention on Biodiversity that incentives be created to promote the conservation of biodiversity; and

SANParks’ statutory mandate;

a comprehensive programme has been implemented to persuade private landowners to make their land available for inclusion in national parks. This programme includes a range of incentives of which the current rates exemption is the most powerful.

When a landowner agrees to make land available for contractual inclusion into a national park, the land is "sterilised" in favour of the State for all but the most limited land uses and may not be used for any purpose other than those reconcilable with the aims, objectives and policies of SANParks. This is a significant price the contracting party pays and cannot be made palatable without some form of reciprocal benefit.

In structuring mutually beneficial reciprocity, the State (and SANParks) have few options in the absence of paying for the land. The landowner can be allowed to carry on limited conservation oriented activities within a national park (on which he/she will be taxed in the normal way). In addition, the State can forego rates on the land in acknowledgement of the stultification of all rights of ownership thereon other than those that can be accommodated in a national park.

In fact, the requirement that the landowner be indemnified from liability for rates on property to be incorporated into national parks is so strong that landowners insist on inclusion into the incorporation agreement of an indemnification clause to the effect that SANParks will be responsible for the payment of such rates and levies, if any.

Potential burden to the State that would follow from rating private land already incorporated into national parks

On existing private land incorporated into national parks, at a rating of 0,001% of property value per annum, SANParks would have to pay an estimated R3 750 000,00 per annum just to retain what it has. An additional R7 500 000,00 would be added hereto for additional land to be acquired. SANParks does not have the capacity to meet this obligation and it is unlikely that the State would be able to justify a further allocation to conservation in view of the other more pressing developmental needs of the country.

Minimal percentage of potentially rateable property would be affected

Were SANParks to achieve all its land partnership objectives (which is unlikely), some 750 000 hectares would be affected. This represents a tiny fraction (0,61423%) of South Africa’s land area, South Africa being 122 103 176 hectares in extent.

The exclusion of areas "used for commercial and business purposes"

4.3.1 General

The meaning of "areas used for commercial and business purposes" is not defined in the Bill and SANParks is uncertain of the intention behind the insertion of this clause.

The State receives all income derived by SANParks, irrespective of its origin. SANParks:

makes and declares no profit and is limited in its function to a statutory mandate;

engages in commercial activity only in pursuit and fulfilment of its statutory mandate.

4.3.2 SANParks and "commercial or business purposes"

In view the aforegoing, no part of a national park is used for business purposes (assuming that "business" by definition entails the intended making of a profit).

On the other hand, SANParks is required to make national parks accessible to the nation and authorised to charge fees for doing so. As the Section now stands, it could be argued that the charging of an admission fee renders an entire national park "an area used for commercial purposes".

In addition, to make national parks accessible to the people of South Africa it is necessary to provide accommodation and related products and services. Without these it would not be possible for SANParks to fulfil its mandate.

Any income derived from provision of these services are received by SANParks as an organ of State and used for purposes specifically authorised by statute.

While commercial transactions are required (and authorised by statute) for SANParks to fulfil its statutory function, those transactions are for the benefit of the nation. The national economy benefits from the allure that South Africa’s national parks have for international tourists while the provincial and local economies within which national parks are situated benefit directly from their proximity to national assets.

4.3.3 Making national parks less accessible

The imposition of rates on any area of national parks would make them less accessible (because fees and charges would have to be increased) and would most seriously affect the historically disadvantaged and most vulnerable members of our community.

This would be contrary to the national process of reconstruction and development and would seriously jeopardise the gains made by government and SANParks in promoting a sense of shared ownership of our natural endowment among persons previously excluded from enjoying the benefits of our national parks.

4.3.4 Concessions and concession areas in national parks

Where SANParks grants concessions to private persons to conduct business in National Parks:

The businesses are taxed in the normal way;

All income accruing to SANParks from such concessions is applied to the execution of its mandate.

The land and assets including buildings thereon vest in the State (SANParks) and never become the property of the concessionaire.

4.3.5 The relationship between property rates and municipal services

The basic philosophy behind the rating of property (in SANParks’ understanding thereof) is that historically rates were charged in return for services rendered by the local authority. Today, many, if not all municipalities separate property rates from service charges.

With certain exceptions that will be dealt with below, national parks do not make use of municipal services and are self reliant in that regard. Where national parks do make use of municipal services those can be (and are) charged for and paid for separately from rates.

5. Submission and recommendation

To comply with the State’s obligation to create incentives for conservation, promote environmentally sustainable development and enable SANParks to fulfil its statutory function it is proposed that the wording of Section 15(2)(e) be amended to read:

"any land declared as a national or provincial protected area".

To avoid any confusion whatsoever, the definition of "protected area" in the Property rates Bill would also need to be addressed:
The Department of Environmental Affairs and Tourism is in the process of implementing a comprehensive environmental law reform programme aimed at rationalising and integrating the previously fragmented framework for environmental governance.

Integral to this law reform programme is the National Environmental Management: Protected Areas Act, 2003 that will serve before Parliament shortly and ought to come into effect before September 2003. The Protected Areas Bill establishes a typology of protected areas in South Africa and provides a definition (including purpose) for national and provincial protected areas binding on all organs of state.

The definition of "protected area" in the Property Rates Bill is different from that contained in the Protected Areas Bill and could lead to confusion in the application of this Bill. It is urged most strongly that the definition of "protected area" in Section 1 of the Property Rates Bill be amended to read as follows:
National protected area means a national protected area as defined in the National Environmental Management: Protected Areas Act. And
Provincial protected area means a provincial protected area as defined in the National Environmental Management: Protected Areas Act

CONCLUSION
All organs of State in South Africa are required to cooperate to ensure that conservation is promoted, the environmental rights entrenched in Section 24 of the Constitution are enabled and South Africa meets its international biodiversity obligations. In addition, the State is constrained by the National Environmental Management Act, 1998 to adopt a precautionary approach to matters environmental and to properly investigate and evaluate any actions that may significantly impact on the environment before such actions are taken.
The imposition of property rates on any part of the country’s national parks that have previously been exempt from such rating will have a significant impact on the environment.
This impact can be avoided entirely if Section 15(2)(e) of the Local Government: Property Rates Bill is amended to read:
"any land declared as a national or provincial protected area or world heritage site "

and the necessary change to the definition of "protected area" is made.