Transport Agencies General Laws Amendment Bill [B27-2007]; Convention for Control & Management of Ship Ballast Water & Sediments: briefing

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
15 August 2007
TRANSPORT AGENCIES GENERAL LAWS AMENDMENT BILL; CONVENTION FOR CONTROL & MANAGEMENT OF SHIP BALLAST WATER & SEDIMENTS: BRIEFING

Chairperson:  Mr J Cronin (ANC)

Documents handed out:
Presentation on International Convention for Control and Management of Ship Ballast Water and Sediments
Transport Agencies General Laws Amendment Bill [B27-2007]
Transport Agencies General Laws Amendment Act Presentation

Audio recording of meeting

SUMMARY
The Department of Transport representatives briefed the Committee on the changes contained in the Transport Agencies General Laws Amendment Bill that affected Department of Transport entities set up under a number of individual pieces of legislation. The main purpose of the amendments, which were considered broadly rather than in detail, was to simplify and streamline the processes for appointment of Board Members of those entities. Board members would be appointed by the Minister for a term of three years, and were limited to two terms of office. The amendments specified that the Chief Executive Officers, who would be appointed for a five-year term, would also be appointed by the Minister. The amendments further clarified the specific skills and expertise required of board members, the representation by the Department of Transport, and the fact of performance agreements.

The requirements for each of the seven entities affected were broadly outlined. Members queried whether the processes already discussed and agreed upon in respect of the Road Accident Fund had been incorporated into the current amendments, whether the Committee would have a role in the appointment process, the different broad areas of expertise, and community representation. Members also suggested that experience rather than formal qualifications should be taken into consideration. They also discussed the role of the Department of Finance, the need for Departmental representation to ensure coordination with Department policies and strategic plans, the role of the performance agreements, the differences between the terms of office of Chief Executive Officers and board members, and the need to make sure that there was overlap in these terms to ensure continuity. The extension of terms pending appointment of a new Board must also be discussed further, and there was also a need to debate whether there should not be limitation of the terms to be served by the Chief Executive Officer.

The Department briefed the Committee on the International Convention for the Control and Management of Ship Ballast Water and Sediments. It was explained that this Convention aimed to prevent the introduction of harmful aquatic pathogens and other alien organisms to other waters. South Africa had participated in a four-year programme that assisted developing countries in reducing transfer of these organisms, implemented ballast water guidelines and built regional capacity. If the Convention was ratified, South Africa would enact legislation to assist in enforcing the terms of the Convention. Ratification by thirty countries was required to put the Convention into effect. Parties to the Convention undertook to abide by its terms, and would encourage development of ballast water management and standards. The full details of the Convention were tabled and explained. Members queried whether the Department had capacity for inspection of ships, the financial implications for the State, and the obligations under the Convention. It was clarified that all ships would be obliged to comply with the rules pertaining to South Africa once in its territorial waters. Members also discussed the implications to smaller vessels and the manner of inspection.

MINUTES
General Laws Amendment Bill (the Bill): Effects on Transport Agencies: Department of Transport (DOT) Briefing
Mr Marius Luyt, Director-General: Department of Transport, briefed the Committee on the General Laws Amendment Bill, and its specific application to the transport agencies. He noted that several entities of the DOT had been established under different Acts. Seven principal Acts had been covered, each of which contained references to the entities. The affected entities were the Cross Border Road Authority, South African Maritime Authority, South African National Road Agency, Transport Tribunal Agency, Civil Aviation Authority, Road Traffic Management Corporation (RTMC) and National Railway Safety Regulatory authority.
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The main objective of the amendments was to short-circuit and improve the currently cumbersome process of appointment of board members to these various entities by the Minister, streamline the processes, filling of vacancies and departmental representation on the boards, and to reduce the terms of office to a three-year period instead of five years.

Mr Luyt began by detailing what had been deleted, added or substituted in the clauses relating to the Cross Border Road Authority. He described the key objectives. The first objective was to appoint board members by the Minister, in consultation. The second process related to the appointment of the Chief Executive, who would be recommended by the board members but finally appointed by the Minister. The Bill made provision for proper performance agreements and was also specific about what kinds of expertise were required. Board. The Bill also reduced the appointment of board members to three years from the previous five years, and board members could only serve for two terms.  The Chief Executive Officer would be appointed for five years and that appointment could be renewed.

At this point the Chairperson interjected, noting that the Committee was pressed for time, and asking the Department to focus on generic issues. He asked the Department to give the specific skill requirements for every entity.

Mr Adam Masombuka, Director: Department of Transport, stated that the expertise required would differ from one entity to another. The Cross Border Agency had provision for eight members, of whom two must be appointed on account of their expertise on Cross Border Road Transport, and two in respect of expertise passenger transport. The South African Maritime Authority listed the expertise required, which was in the fields of international shipping, domestic shipping, maritime law, corporate governance, financial management, marketing and promotion, business, maritime infrastructure, economic analysis, current in emerging technologies and environmental management. The Board of the South African National Road Agency (SANRAL) was to consist of the Chairperson, a senior officer of the Department of Finance, the Chief Executive Officer, or any other person who had qualifications, skills, expertise or experience in matters concerning national road, corporate governance, financial management, business or operations of the agency.

Mr Masombuka remarked that in respect of the Road Traffic Management Corporation there had been no amendments to what had already been listed as the requirements, as the Department had been satisfied with the way it had previously been worded. The National Railway Safety Regulator's Board was to consist of the Chief Executive Officer, the departmental representative, the Director-General of the Department of Labour and Safety and Security, and not more that nine other persons representing the railway industry, organised labour and the community. Those nine board members should have expertise that would be relevant to the railway industry and organised labour and the community.

The Civil Aviation Authority’s board would consist of not more than seven members of whom one must be a non-executive chairperson, the departmental representative, and the Chief Executive Officer. The rest of the board members should have expertise in one or more of international civil aviation, domestic civil aviation, corporate governance, financial management, business, economic analysis, environmental management and aviation infrastructure.

Discussion
Mr B Mashile (ANC) sought clarity on the generic issues that were spelled out. He commented that this Committee had spent much time and effort on re-shaping the Road Accident Fund (RAF) and he asked whether these new provisions aligned with the provisions of that Fund.

Mr Masombuka replied that any amendments to the RAF legislation were removed from the General Laws Amendment Bill, as this Committee and the Department had already discussed the issues and gone through the processes. However DOT had used the discussions from the RAF as a basis for the processes now set out in the General Laws Amendment Bill.

Mr S Farrow (DA) wanted to know if there was also a process for the Committee to become familiar with the process. The Committee should still have a role and function, to check that the appointments were in line with the requirements. He did not recall whether there was a specific provision for the Committee to play a role.

The Chairperson  mentioned that the Committee still had to familiarise themselves with the precise terms of the Bill, and were meeting today to try to understand it in broad terms. The Committee would focus on the specific skills at this time.

Mr Mashile asked if there would still be community representation on the Board of the Cross Border Agency.

The Chairperson mentioned that the skills profile that had been given in the new Bill included  experience in business, legal knowledge, relevant experience in corporate governance or knowledge about Cross Border transport, and that there had been reference made to skills in financial management or economic management.

Mr Luyt added that the composition of the Board had now been divided, so that four members would be chosen for their specific expertise in the areas of freight and passengers, and the remaining four would be appointed for other expertise. Community representation could be vested in any one of the members.

Mr Farrow suggested that labour and consumer expertise covered such a huge area that it might well encompass the area of community representation.

Mr Farrow mentioned that employees of the State should not be members of the board, and therefore queried how the State representation was envisaged.

Mr Luyt responded that the key focus was that shareholders should be able to give policy direction to the board.
 
Mr Mashile stated that the reason for suggesting community representation in relation to cross border matters was because of the close involvement with passengers. Expertise required dealing with society, and this would therefore include passengers.

The Chairperson noticed that the Department of Finance would be playing quite a role and asked for an explanation.

Mr Luyt used the example of SANRAL noting that there were significant amounts of money involved. The Minister of Transport would be consulting with the Minister of Finance. Where there was such a large component of Department of Finance involvement, that would basically explain their involvement on the Boards.

Ms N Khunou (ANC) commented that there appeared to be some danger that in relation to the national roads, big business would be playing a dominant role, to the possible exclusion of previously disadvantaged groups. She asked what had been the rationale behind the thinking on this issue.

Mr Luyt said that a mixture of board members were very important, and the significant amounts of money being dealt with would require board members with experience of finance. The intention was not that one sector should dominate. The key challenge would be to ensure that the right members with the right expertise were appointed to the Boards.

Ms Khunou reiterated that she was not speaking only about traditionally disadvantaged groups, and it would be particularly important to have a broader mix of board members, including perhaps those who had experience although they did not hold formal qualifications. She pleaded for a more inclusive process.

Mr Masombuka responded that when advertising for nominations for board members, organised groups should also take their role seriously as they could also nominate people from their group. For instance, it was perfectly conceivable that smaller business associations could organise themselves and nominate someone out of their association.

The Chairperson took the point, and noted that it was clear that the option of experience must somehow be included, and it would be necessary to consider how best this could be done in the legislation. That was why the Department needed to look at "the skills" required of board members.

Mr Farrow noted that it would be important to cover strategic planning, and stressed that there needed to be correct coordination between Board and Departmental policies. It was necessary to ensure that there was departmental representation

The Chairperson agreed that this was an important aspect.

Mr Mashile asked for clarity where there was mention of departmental representation.

The Chairperson clarified that this was mentioned throughout the clauses of the Bill, usually using the same terminology, which usually appeared under sub-clause (b). The person to be nominated by the Minister would generally be the position for the Departmental representative, who would have to be a serving member of the Department in order to retain his position on the Board.

Ms Khunou related the experience of a black economic empowerment business that, having been awarded a tender, was refused assistance from a large company which it had approached. If integration and transformation were to succeed, and the economy to be boosted, companies must guard against such matters.

Mr Luyt responded that the instrument that could be used to guard against that would be the performance agreement. The Minister would be using those performance agreements to specifically address issues that fell outside the broad legal framework.

Mr Mashile asked how the representation was geared to address financial skills.

The Chairperson indicated that the relevant principal Acts already addressed these issues, and those  sections had not been changed.

Ms Khunou noted that all the other board members’ expertise was listed and asked why was the expertise of the Chief Executive Officer not listed.

Mr Luyt replied that different businesses required different expertise.

The Chairperson asked why and what was meant by the statement that the Chairperson of the Civil Aviation Authority must be "non-executive".

Mr Luyt responded that this meant that the Chairperson could not a Chief Executive or Chief Financial Officer. All chairpersons were non-executive, being outside the day-to-day running of the entities.

Mr Mashile noted that the board was composed of seven persons, with three members already being prescribed, and asked if it was considered sufficient to find space for the other experts to be appointed to the Board.

Mr Farrow sought clarity on whether the departmental official was seen as part of the board or an addition to the board.

The Chairperson replied that the clause stated that one of the seven board members one of them should be a departmental official, so this meant that the official was part of the board.

Mr Luyt added that the Department had received motivation for the concept of a seven-member board from the principal Act. However, for the Civil Aviation Authority board, there could be an exception, as a variety of expertise was required.

Mr Farrow suggested that all those areas of expertise could in fact be vested in one person, and the wording did not mean that there had to be a different person appointed for each skill mentioned.

Mr Luyt mentioned that the process of board appointments had been streamlined by the fact that the Minister would appoint board members.

The Chairperson noted that the wording did vary slightly from entity to entity.

Mr Luyt responded that the entity like the RTMC was different. RTMC had a shareholders' committee, which could also be seen as a phase. The Ministry chaired this committee.

The Chairperson noted that thus far the Bill seemed to be fairly straightforward in that it set up a more direct process, which would be run effectively by the Minister. One of the results of the discussions on the RAF legislation was that the Committee, as part of its oversight function, must be informed of the processes, and so it was necessary to see how the Committee could also be involved in these processes.

Mr Farrow commented that in the interests of transparency perhaps the names of potential candidates should be made public. He suggested that in that way the oversight role would be fulfilled and the transparency process would also be addressed.

The Chairperson responded that public transparency should not encumber the process.

Mr Mashile raised issue with appointing the Chief Executive Officer for five years while a board member was appointed for only three years.  He felt it was too little time for the board members to play a definitive role. He also raised the point that it could take longer than the prescribed term of three years for members to fulfil their obligations under the performance agreements.

Mr Luyt replied that sometimes it took much longer for a Chief Executive Officer to settle in to a position, and that the Department, in trying to find a balance, had decide that these periods were appropriate.

Mr Mashile suggested that the terms relating to extension of the term of board members pending appointment of a new board should be subject to certain time limits.

Mr Masombuka responded that was no provision in the principal Act that allowed the Minister to extend the period of the old board while finalising a new board.

Mr Cronin commented that the question had not been answered and that it should be flagged for further discussion at the next meeting.
 
The Chairperson asked if the possible renewal for a second term of office that applied to board members would apply also to the Chief Executive Officer.

Mr Luyt responded that a board member could have his term of office renewed for a second term only, while the Chief Executive Officer could be reappointed without restrictions.

Mr Mashile did not agree with this principle.

The Chairperson pointed out that members of a board could tend to lose interest after a while; although they might be quite active when first taking office they often did not continue to provide prime leadership. In the case of Chief Executive Officers, this was their full-time work and they must participate fully in order to retain their positions. The fact that board members were part-time only had often been a problem. He was in favour of no more than a  three year term for board members. He noted that it was important to ensure that there was in fact disjuncture between the terms of office of the board and the CEO, so that there was not a collapse of continuity, with both leaving at the same time. There should perhaps be debate on the issue.

Mr Luyt mentioned that the performance agreement was quite straightforward.  It was an agreement between the shareholders and the board, The national objectives  would be flagged, along with targets that the Department wanted to set, and it would be binding on the board, because it formed part of the legal framework. This ensured that any particular entity must move in the right direction, and was basically the translation of national objectives into business objectives.

Mr Mashile commented that it should be recorded that there be recourse measures available in the event of non-performance.

The Chairperson stated that this would vary over time and from one entity to another.
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Mr Luyt used the RAF as an example. He said that there was provision for removal of the Board members, although this should be done as a last resort because of the legal and reputation implications. The performance agreement gave the Department a better lever to check if an entity was performing. It ensured that the Department could also move into a more proactive role. However, he did agree that it was not completely effective.

The Chairperson commented that the generic issues had been covered, and the Committee would leave more detailed issues until the following week.

International Convention for the Control and Management of Ship Ballast Water and Sediments (the Convention): Departmental Briefing
Ms Nosipo Sobekwa, Chief Director: Maritime Transport Regulation, DOT, noted that the reason for the Convention were that water ballast of ships could result in harmful aquatic pathogens and other alien organisms being brought in to other waters, with negative consequences for the environment, human health, property or resources, or impairment of biological diversity or interference with other legitimate uses of such areas. South Africa had participated in a four-year GloBallast Programme from 2000 – 2004.  The purpose of the programme was to assist developing countries to reduce the transfer of harmful organisms in their ships' ballast water, to implement ballast water guidelines, to prepare for the implementation of the Ballast Water Convention, and to build regional capacity in Ballast Water Convention (BWC).

The general obligations of countries adopting the Convention were to give full effect to provisions of the Convention. A party to it could individually or jointly take stringent measures consistent with international law to prevent, reduce or eliminate transferral of these harmful organisms. Parties were to encourage the continuous development of ballast water management and standards.  They were also to ensure that application of the Convention did not cause further harm. Full details were tabled, as set out in the attached presentation.

Ms Sobekwa noted that if parliament were to approve the ratification, the next step would be to develop legislation, and ensure that each port had a management plan consistent with the aims of the Convention.

Discussion
Mr Mashile had heard much about the content of this Convention and was yet unclear what would happen in the case of non-compliance, especially when dangerous pathogens were found on the ships, and what would pertain to the South African Maritime Safety legislation..

Mr Dumesani Mtembu, Acting Deputy Director, Maritime Transport Regulation, DOT,  responded that the Convention stated that the State affected could take measures in addition to those prescribed in the Convention, so that its relevant legislation could also be applied..

Ms Sobekwa added that non-compliance was an element of port state control. As with any other maritime issues, the proper procedures by the relevant authority must be followed, and there would be no detention unless these steps were followed. If the non-compliance was not rectified, then the ship could be detained.

Mr Mashile asked if the State Law Advisors had they checked the consistency of this Convention against South African environmental laws

Ms Sobekwa replied that the Department would never send any convention to Parliament without the approval of the State Law Advisors and the international law experts at the Department of Foreign Affairs.

Mr M Moss (ANC) asked when it was likely that this Convention could be implemented.

Ms Sobekwa replied that it could not be implemented unless Parliament ratified it. This meant that only after ratification could the Department begin to enact any legislation to support the Convention. There was also a need to wait until enforcement of the Convention by the International Maritime Organisation, and she noted that the Convention, in order to become fully in force, required ratification be thirty countries

Mr Moss was also concerned about capacity, as inspectors would be needed to inspect the ships. He asked what was being done in that regard.

Ms Sobekwa replied that the South African Maritime Safety Authority (SAMSA) and the International Maritime Organisation (IMO) were assisting developing countries in training and SAMSA personnel already had the necessary skills, but would have to train more as there was a general shortage of skilled workers. The Department needed to encourage more young people into the profession. Most of the captains and surveyors were older white men; and there was generally a lack of interest from younger people, either black or white.

Mr B Pule (UCDP) was not clear with the statement that parliament had to ratify, as he felt that there should be some further clarity before ratification.

Mr Mashile asked the Chief State Law Advisors had found that there were likely to be financial implications.

Ms Sobekwa agreed that there were financial implications. Money would be needed to obtain the right equipment, and there was a need for funding for further capacity building.

The Chairperson asked whether all the relevant consultation had taken place.

Ms Sobekwa replied that all the relevant consultation had taken place to ensure that all stakeholders had made input.

Mr Mashile was worried about the significance of the financial implications.

Ms Sobekwa stated that the financial implications would be manageable. The Department of Environmental Affairs and Tourism were already performing similar types of functions and there had been budgeting for the obligations.

Mr Moss commented that there were currently many hazardous diseases already been identified and asked what preventative measures were in place.

The Chairperson added that the lists and knowledge would be built up over time.

Ms Sobekwa replied that the Convention itself was emphasising cooperation between member states. She cited a hypothetical example of a ship from Brazil, that was inspected, found to be non-compliant, but was not detained. The port authorities in the port it was leaving would be obliged to inform the port authorities in the next port where that ship would dock.

Mr Mashile asked what would happen if a ship carrying harmful organisations was registered in a country that was not a signatory to the Convention.

Ms Sobekwa replied that no matter where the ship was registered, once it was in the territorial waters of a country that had signed, it was obliged to comply with national legislation and Convention obligations that pertained in that country.

Mr Mashile asked what would be the implication for smaller vessels.

Ms Sobekwa replied that this would depend on whether the vessels had ballast water tanks. If they needed to do ballast water exchange or treatment then they would be affected. They would only be exempted if the water taken on as ballast was from South Africa.

Mr Pule asked who would inspect those ships from other states.

The Chairperson replied that any ships coming into South African ports would be inspected by SAMSA.

Mr Mashile asked why there was a necessity for South Africa to ratify this convention if it was clear that the ships of signatory and non-signatory nations would be treated in the same way.

Mr Cronin replied that South Africa would be setting an example internationally, and this would also enhance its wish to be at the forefront of technology and international cooperation.

The meeting was adjourned.