Gambling Commission Review Report: Public hearings, Trade & Industry Budget Review and Recommendation Report

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Trade, Industry and Competition

01 November 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee heard submissions from the Funding Practice Alliance, Aristocrat Technologies and Amatwina Sports in respect of the Gambling Review Commission Report. The Funding Practice Alliance said it had conducted research into the size and scale of funding to community service organisations, in light of frustrations that there was inconsistency, lack of a statement of intent, and no long-term purpose for the funding. It also highlighted concerns about the  confusing lines of accountability between the Board, the Minister and the three distribution agencies, poor performance of the distribution agencies, and the fact that less than 50% of funding had been distributed in 2009. There was also a lack of clarity on funding criteria and the criteria continually changed. Further criticisms were expressed about the limited administrative relationship between the Trust Fund and the beneficiaries, and insufficient human resource capacity to process the applications that were received, resulting in a backlog. It recommended that there needed to be a greater legal capacity at the Board for the signing of contracts and the following of legal procedure. The “miscellaneous” category of funding should be subject to greater accountability. Members asked if these concerns had been raised during meetings with the National Lotteries Distribution Trust or Board, and asked about the Alliance’s relationships with and assistance to small enterprises.

Aristocrat Technologies, a manufacturer of gaming equipment, welcomed the introduction of national licenses and the proposals around licensing of testing agents, but said that the onerous regulations posed a particular challenge. This company recommended that the legislation be changed to allow for multiple certification agencies, and noted that an applicant currently had to make nine separate applications to each of the provinces. It also called for exemptions under the Financial Intelligence Centre Act because the law was not designed for manufacturers of gaming machines. More accountability and uniformity was needed in the regulatory framework. It also asked that a more consistent approach, not a forced one, be taken so that companies could get to the targeted level 2 on Broad Based Black Economic Empowerment compliance. Members asked for clarification of the concerns about the National Regulator for Compulsory Specifications and the position of the South African Bureau of Standards, asked for comment on the illegal equipment entering the country, comment on the impact on online gambling, and more detail on the ratings.

Amatwina Sports had called for the legalisation of greyhound racing, which was currently banned in South Africa because of concerns about animal welfare, although a veterinarian pointed out that greyhounds were a very docile breed, that this was legalised elsewhere, and that the failure to allow racing discriminated not only against greyhound owners, but their right to gamble. Members asked in how many countries the racing was legal, and pointed out that there had been concerns about over-breeding.

The Department of Trade and Industry (dti) provided feedback on the transfer of funding to the National Consumer Commission (NCC), pointing out that funding could only properly be transferred in terms of the Public Finance Management Act once it was demonstrated that effective, efficient and transparent financial systems were in place. It had taken some months to establish this fact, but money was transferred in September 2011, and the allocations would be R32.9 million in 2011, R41, 6 million for 2012/13, and R43,9 million for 2013/14. So far, R19.7 million of the 2011 allocation was transferred, and the NCC had also received R16.1 million from the sector-wide Entrepreneurship, Employment and Eequity Programme fund. The NCC was unlikely to spend the full amount although its revised budget submission was not coherent.

The Committee then turned to considering and adopting its draft Budgetary Review and Recommendation Report (the Report). Some of the main points were highlighted, in respect of both the dti and its entities, including the Companies and Intellectual Property Commission (CIPC), the South African Bureau of Standards (SABS), the National Regulator for Compulsory Specifications (NRCS) and the NCC. The Chairperson noted that Parliament was in urgent need of setting up its Budget Office to assist Committees. Members noted that the NCC had been asked to provide answers, and felt that the Report should specify where it had failed to do so. Members discussed the format of the Report, and suggested that it be split into eight sections, one each reflecting the eight programmes. ANC Members urged that the number of recommendations be cut down – either to eight or five, but a DA Member, who had spent a substantial amount of time crafting recommendations for discussion by the Committee, felt that this undervalued the amount of work put in by him and urged that the Committee should not dilute its recommendations to that extent, and should put the dti to terms to deal with important issues. Some Members felt that some of the issues raised, although valid, did not find their proper place in this Report, or that answers had already been given. The most important issues were agreed upon as recommendations on administration and filling of vacancies within a three-month time frame, an interrogation of how the Industrial Participation Programme had performed since 1995, a review of the Industrial Development Zones and Industrial Policy Action Plan programmes. The spending pattern of the NCC, whether it had a need for more funding, and concerns about the human resources and tensions between it and the dti, were also raised, although Members pointed out that little was said of it in the draft Report. It was noted that The Minister was conducting an independent investigation into the NCC. The Department of Trade and Industry made comments, agreeing that capacity was a major challenge cutting across all entities, and that the timeframes for filling of vacancies would be a positive tool. The Committee recorded that the question of the opt-out register for municipalities must be put specifically to the NCC, who must report back on progress, and that resources and capacity would be highlighted as further concerns, with the recommendation that resources must be increased to enable entities to meet their challenges. Members voted to adopt the Report, as amended.

Meeting report

Gambling Commission Review Report: Public hearings
Funding Practice Alliance (the Alliance) submission
Ms Nomvula Dlamini, Representative, Funding Practice Alliance, said that the Alliance consisted of four organisations whose purpose was to conduct research into the size and scale of funding to community service organisations. The Alliance said there was frustration at the funding by the National Lottery Distribution Trust Fund (NLDTF), so it had decided to embark on a strategic response, and to conduct research into the National Lottery Board (NLB) and the National Lottery Agency to get insight into the disbursements being made, by gathering empirical evidence, and then to work towards a solution. The Alliance wanted to add its voice to the call for a review of the legislation.

Ms Joanne Harding, Representative, Funding Practice Alliance, reported on the findings of the research. She said there was no statement of intent and no long term purpose for the NLDTF. There were confusing lines of accountability between the NLB, the Minister and the three distribution agencies. The distribution agencies, for example, were not accountable to the NLB, but to the Minister. The performance of the distribution agencies was such that less than 50% had been distributed in 2009, or only R6 billion.

There was a lack of clarity on funding criteria and, in practice, a shifting of the goalposts for Community Service Organisations (CSOs), because funding criteria continually changed. There was a limited administrative relationship between the NLDTF and the beneficiaries. For example, application forms could only be filled out online, although many organisations did not have access to the internet. There was also a lack of human resource capacity to process the applications that were received. At the moment there were 12 000 applications that needed to be processed.

She said that the NLB should have a five year strategy. Currently an organisation wanting to benefit had to reapply each year for funding, whereas a five year term would mean less applications and therefore less administrative work. There also needed to be a greater legal capacity at the NLB for the signing of contracts and the following of legal procedure.

The category of “miscellaneous” funds had no public accountability attached. She said that organisations like the National Youth Development Agency, which had recently received funding from the NLB, should have been funded from the fiscus. The NLB funds should be ring-fenced specifically for community service and in addition the Minister should be held accountable for their distribution.
Mr X Mabasa (ANC) asked if the Alliance had met with the Distribution Board or the NLB, and,if so, asked if the weaknesses outlined here had been discussed.

Mr J Smalle (DA) asked what the Alliance’s relationships with Small, Medium and Micro Enterprises were, and how the Alliance would assist them.

Ms Harding said that the Alliance had met with the NLB and its executive staff, as also with the as well as distributing agencies’ members. The Alliance had attended the public hearings on the NLB and the NLDB. She noted that her mention of the 50% of funds not distributed was based upon the remarks in the judgment in the Cachalia matter in the Court. She said the application guidelines were of no help as the Alliance had collected rejection letters and found huge disparities in the reasons given for rejecting the applications. She herself was linked to a rural based organisation, but she could not assist them as this would be against NLB rules.

Ms Dlamini noted that the key concern of the Alliance was that, despite the road shows of the NLB, which were appreciated, the NLB was still missing an institutional platform to allow for continuous engagement.

Aristocrat Technologies submission
Mr Pramodh Munbodh, Compliance Executive, Aristocrat Technologies, said that it was a manufacturer of gaming equipment, and thought that the introduction of national licenses and the intended licensing of testing agents, which had emerged from the Gambling Review Commission, was a positive move. There would now be a choice in the testing agent. Previously, only the South African Bureau of Standards (SABS) was authorised to do so.

He said there were still some challenges, one of which was the onerous regulations with which companies had to comply. He felt that a National Regulator for Compulsory Specification (NRCS) certification would be sufficient, but provinces still wanted further approval, and this meant that an applicant had to make nine separate applications to the nine provinces for approval of the same equipment.

He proposed that the current three-step process be reduced to two steps and offered three alternative ways this could be achieved (see attached document).

He then named some particular challenges. Aristocrat recommended the amendment of section 25(2), to allow for multiple certification agencies. It also recommended that Financial Intelligence Centre Act (FICA) exemptions should be granted to manufacturers like Aristocrat, because the law was not designed with gaming machine manufacturers in mind. Aristocrat recommended that improvements must be made to the
uniformity and accountability of the regulatory framework. Again, he cited the fact that currently Aristocrat had to apply to nine provinces, and would prefer to see the introduction of one application to cover all provinces.

Mr Munbodh finally said that in respect of broad based black economic empowerment (BBBEE), his company would like to see a consistent approach for companies to get to the targeted level 2 compliance. He felt that companies should be left to grow at their best pace, and not be forced to get to level 2.

Mr Smalle asked for clarification of Aristocrat’s concerns on the NRCS

Mr Munbodh replied the NRCS had had staff on strike last year November, and for three weeks the NRCS was shut down, which had an impact on companies. This year there had been another staffing issue. Having alternative testing agencies would mitigate the impact of trade union actions, as there would be alternative avenues that companies who needed to get equipment tested could follow.

Mr B Radebe (ANC) asked if it would be seen as a problem if the SABS remained in overarching control over the testing bodies. He also asked if Aristocrat could comment on the illegal gambling equipment that was entering the country, and if he could also comment on the impact of online gambling.

Mr Munbodh responded that the recommendations regarding the SABS and testing bodies were a recommendation from the Gambling Commission and not from Aristocrat. Aristocrat employed 38 people and was the largest manufacturer and distributor in South Africa. There were eight other companies in the industry. Illegal machines were indeed entering the country and these had an impact on Aristocrat, because the low price of these machines made it impossible for Aristocrat to compete. He also added that the company had adopted a “wait and see” policy, to see how the regulations about online gambling would take shape.

Mr T Harris (DA) felt that there were benefits to having the provincial boards.

Mr Harris wanted to know where the B-BBEE rating level requirement came from.

Mr Munbodh explained that this rating requirement emanated from the National Gambling Policy Council, which had representatives from all nine provinces, the Gambling Board and the Department. Businesses had to attain level 2 compliance by 2015. His company wanted to promote the two step method of certification as a means to streamline business.

Amatwina Sports submission
Dr Jan De Wet, a Free State veterinarian, and owner of the fastest greyhound in South Africa, said that Amatwina Sport had already submitted a report by Professor Elize Snyman Van Deventer, in which she had researched dog racing, as well as submitting of reports by Shane Brody and Sean Collins.

Dr De Wet felt that he was being discriminated against by not being allowed to race his greyhound. Currently, greyhound racing was not allowed because of animal welfare issues. However, he pointed out that greyhounds were the least aggressive breed of dog. Greyhound racing was a big industry, with the potential to create jobs. He wanted the discriminatory regulations against greyhound racing removed. He pointed out that the limitations also limited his right to gamble.

Mr Johan Human, Representative, Amatwina Sport, said his organisation was trying to get a regulated greyhound racing industry in South Africa. Fears about greyhound racing were due to misperceptions and a lack of knowledge.

Mr Harris said that the Gambling Board had expressed concern about over-breeding of greyhounds. He asked for an indication of how many countries regarded greyhound racing as legal or illegal.

Dr De Wet referred Mr Harris to Professor Van Deventer’s report for the answers. He added that in 1993 the Citizen newspaper had carried a report in which the ANC had promised to legalise greyhound racing.

National Consumer Commission (NCC) budget: Department of Trade and Industry briefing
Mr Lionel October, Director General, Department of Trade and Industry, said that the budget of the National Consumer Commission (NCC) could only be transferred if it had fulfilled the legislative requirements which demanded that the Council (like any other entity) must have effective and efficient and transparent financial management and internal control systems. In March 2011, he had written a detailed letter to the NCC outlining all the requirements. At the end of July, he had found that the entity was not ready yet. However, subsequently, the outstanding issues had been sorted out, and the money was transferred in September 2011.

He noted that the budget was not paid over in a lump sum but was allocated on a cash-flow basis. The allocations were R32.988 million for 2011/12, R41.577 million for 2012/13, and R43.864 million for 2013/14.  Of the 2011/12 allocation, R19.7 million had been transferred. The NCC had processed and paid for all orders up to 30 September. In addition, it had received R16.1 million from the sector-wide Entrepreneurship, Employment and Equity Programme fund, making up a total allocation, to date, of R48 million. The NCC’s own budget anticipated that it would only spend R28 million. The revised budget submission was not coherent, containing duplicated and improperly costed items. Extra funds would not be allocated unless the NCC could show that it spent its budget properly and well.

Draft Committee Budgetary Review and Recommendation Report (BRRR) on Department of Trade and Industry
The Chairperson tabled the Committee’s draft Budgetary Review and Recommendation Report (BRRR or the Report) for discussion. She noted that Ms Jodi Scholtz, Deputy Director General, Department of Trade and Industry, had reported that the Department had to fill vacancies within a maximum of three months. The Committee noted the increase in under expenditure. The Minister had also expressed his concern on this point. He had also informed the Committee that some beneficiation was taking place, without policy intervention. The SABS had informed the Committee that 95% of solar heating manufacturing companies were foreign owned. The Department said it was not concerned with this figure as long as the companies were manufacturing in South Africa. The Chairperson said that key issues concerning the NCC were its public awareness and outreach programme, and its budgetary constraints.

Mr Harris said that the Report should note that the Committee had requested the NCC to provide additional answers, which had not been received.

Mr G Mackintosh (COPE) asked whether the NCC’s legal bills would be met by the Department, should it overrun its budget.

Mr October replied that requests would be entertained on merit, but that no guarantees could be given beforehand.

The Chairperson noted that the Report noted that the Companies and Intellectual Property Commission (CIPC) needed to improve its data capturing accuracy, that the call centre should be outsourced and that an annual returns payment reconciliation should be done.

Mr Smalle said that CIPC had indicated that it had an 18 month turnaround plan.

Mr Harris noted that the outsourcing of the call centre had to be completed by December.

The Chairperson said it was very important that a Budget Office must be set up in Parliament, as the Committee did not have the capacity to pursue issues required of it. She asked for discussion on how effectively the budget allocation had been used, to deliver on the strategic plan.

The Chairperson felt that the draft Report was too long. She suggested that it be broken up into an introduction, conclusion and a middle section, which would contain the detail. The Report would recognise the important role that the CIPC played and the Committee would thus continue to monitor its progress. The Committee was concerned at the level of public awareness of the Department’s entities, and the products and services offered.

The Committee discussed the wording of the introduction.

Ms S van der Merwe (ANC) suggested that the conclusion section should be divided into general conclusions and specific recommendations.

Ms van der Merwe said the BRRR report should be a broad report about the budget allocation

Mr Radebe said that in future the Committee should derive its report from the Department’s quarterly Section 32 reports.

Ms van der Merwe suggested that the Committee should review the Department’s eight programmes and make recommendations, centred on those programs. 

Mr Harris raised an objection at this point. He noted that his party had already followed the Committee’s request to make a list of recommendations. If these were ignored, it would be disrespectful, since a substantial amount of work had been put into this.

The Chairperson said the Committee would accept the contributions made by Mr T Harris (DA), and, if Members agreed with them, they would be incorporated. She added that the Committee was expected to identify the entities that might require closer financial review. The Committee Members felt strongly that the NCC’s work was important. She said she felt strongly that the Automotive Development Centre had done well for the sector.

Mr Harris said that each and every recommendation he proposed had significant budget implications. He said the Committee needed to recommend that the Department of Trade and Industry (dti) must give an update on whether it was coordinating its work with that of other departments. The major strategic risk in the 2010 plan was interdepartmental coordination, and there had not yet been an update from the dti on that point. This was critical to the way the budget was spent.

He also noted again that that NCC had not given the Committee the information it requested. There was no oversight over Khula. He felt that the Committee’s recommendations needed to demand that the information be given. He agreed with the Chairperson on the automotive investment, and said last year there were payment challenges that were not processed on time, although they were in the budget.

Mr Radebe said the Committee needed to follow the Public Finance Management Act (PFMA) prescripts. He said the PFMA required departments to provide quarterly reports to Parliament on all the programmes undertaken, including the expenditure patterns. The Committee’s Recommendations should specify that dti needed to compile and provide Section 32 quarterly reports on the work it undertook, as well as the entities.

Mr Radebe suggested that perhaps the Committee should limit itself to making five recommendations in the BRRR, since the dti had too much work already and did not need to be burdened with more recommendations. The Department and its entities needed to commit to an undertaking to provide the quarterly reports.

Mr N Gcwabaza (ANC) said Members needed to distinguish between the BRRR, which assessed the performance of the Department when implementing its programmes against the budget in the financial year, and which could be discussed at any meeting, and this particular sitting, to deal with the business of the current financial year. When Members requested information that was not relevant to this meeting, this seemed to indicate that they were not aware of what they should be doing. This Committee should be able to identify weaknesses and strengths, for each programme, and the spending for the current financial year.

M S van der Merwe (ANC) proposed that recommendations be made in line with each of the eight programmes that dti was undertaking in the current financial year. She suggested that details or issues on records of expenditure should be minuted in the normal Committee meetings. She reiterated that only eight recommendations be set out, with some sub-issues addressed under each.

Mr Harris voiced his unhappiness with this suggestion, saying that his party had put a lot of work into the recommendations, and the DA’s recommendations reflected what was said in the Report. Although he was happy to debate them, he did not think they should merely be ignored, as this would amount to showing disrespect for the work done by the opposition. It was necessary to find the middle ground. He repeated again that much work had gone into his fourteen recommendations, and they reflected information that was in the Report.

Mr G Selau (ANC) said Members were confusing Annual Reports with the BRRR. The purpose of this meeting was to assess progress made, when measured against the budget. Some of the issues raised as recommendations were not appropriate for the BRRR, but would be appropriate for other, more general meetings of the Committee. He said that the budget review must be linked to the programmes that were ongoing. He agreed with the suggestion that recommendations be programme-specific.

The Chairperson read out a line from the report as follows: “The report attempts to provide an assessment of the financial performance of the Department, and the identified entities, for the 2010/11 financial year; and an assessment of the first six months of the 2011/12 allocation within the current context of the three year Medium Term Expenditure Framework. In addition it considers the performance as reflected in the Annual Report 2010/11”. She reminded Members that this was the timeline under review. The timeline was specific.

Ms van der Merwe disputed that she had ever suggested that the fourteen recommendations of the DA should merely be discarded, and emphasised that she was rather suggesting a better way to organise those recommendations. She felt that some of the recommendations were requesting a further report.

Mr October said the points made by Mr Harris in his document had captured all the strategic issues in the Annual Report. The issue was not just to get more reports from the dti, but to see how the issues were interrogated. Some of the recommendations, especially those in respect of administration and vacancies, were vital. He agreed that the Department needed to submit quarterly reports. He said that the suggestion that vacancies needed to be filled in three months was good, and would encourage hard work by the dti. There was a need to closely interrogate how the Industrial Participation Programme had performed since 1995. Dti wanted to make some recommendations on how to improve on the programme. The Committee might also want to consider doing a complete analysis of the entire programme.

Mr October also said there was a need for a review of the Industrial Development Zones and Industrial Policy Action Plan (IPAP) programmes. It would be good to have a strategic review of how far the Department had come. He said dti was in discussions with National Treasury for a substantial increase in the funding of the programmes, for which National Treasury had already promised R25 billion over the next few years. He noted that the Committee would have to “fight for money” if it wanted dti to scale up on the IPAP. The Committee needed also to discuss the IPAP recommendations and trade promotion, especially within Africa and the BRIC (Brazil, Russia, India and China) bloc, with a view to suggesting whether these programmes needed to be closed down, or how they needed to be taken forward.

The Chairperson said the recommendation that the Committee should receive quarterly reports was a repetition of what was covered under the section 32 reports, and pointed out that Parliament had already been getting these reports

Mr Smalle said, in respect of the recommendation on the filling of vacancies, that this should remain in the BRRR, because the Committee must hold the dti accountable. He said the Department had to trim to three months as a turn-around time for the filling of vacancies, and stressed that targets on timeframes must be included.

Mr Gcwabaza agreed with that recommendation. One of the causes for under-expenditure was vacancies that were budgeted for, but not filled, and, in order to address this, the Committee should hold the Department to the three months timeframe. He noted that both the suggestion, and the fact that the dti had committed to it, should be reflected in the BRRR.

Other Members agreed to retain this proposal in the list of recommendations.

The Chairperson, in respect of Industrial Development, read out the recommendation, noting that the dti was required to submit a detailed report on IPAP2 that set out achievement of all milestones based on the original targets. When she had made an input on the item, it was related to the budget. The Committee needed to review the increased funding of this programme in future budgets.

Mr Harris agreed, and said the proposal could be changed, so that it referred to the extent to which the money spent on IPAP2 had resulted in returns on the investment.

Ms van der Merwe suggested that the proposal should read “The dti (is to) undertake a review of IPAP2 and its achievements milestones, as well as a review on the NIPP”.

Mr Radebe concurred, but said there needed to be an emphasis on increased funding for the programme, so that the Department could focus on doing the good work. The auto industry was successful as a result of this investment. There should be a note about further allocations.

The Chairperson reminded the Committee that when dti started working on the programme, it noted the funds were insufficient. She said that the Committee could not identify the number of jobs created during the period under review.

Mr October gave some background to the IPAP. This had been introduced in 1995, despite some serious objections from the World Bank. The IPAP stipulated that if the country imported goods valued at more than US$10 million, South Africa could impose obligations on bidders, which they had seven years to fulfil. Bidders had to submit a plan on issues such as job creation and localisation. Since 1995, thousands of projects had imported equipment. He noted that making application for a tender created certain contractually-binding obligations, since undertakings were required that a bidder would carry out the project in line with the terms. He said that in respect of non-defence acquisitions, seven years was allowed to conclude the obligations. This was the reason why there were no quarterly reports, and the Department could not now go back and ask for those reports. However, it was possible for the Department could look back and give an indication of whether a tender bidder had performed or not.

Mr October added that most programmes were not quarterly projects, but reports would be tabled nevertheless on performance. He reiterated that when equipment was important, there were obligations that arose. He cited an example of the US giving aircraft tenders to Boeing, with a condition that the latter must work on a programme of localising manufacturing. He reiterated the World Bank was opposed to the programme, as it felt that it was an imposition of an extra cost.

Mr October explained that currently, most countries no longer imported, but worked on programmes to develop goods internally. He said there was a need to declare local content and make better use of the money that was available. Dti worked towards reducing imported content. He said the Department needed to conduct a strategic review of the NIPP programme since inception, and make recommendations on the future of the programme. Then the Committee could interrogate the issue of importing goods.

Mr Harris said that Mr October’s statements indicated that there was a review process under way, and he felt that the BRRR should reflect that. He also suggested that the Committee should specify that the review must incorporate details on investments and sales milestones, and the number of direct and indirect jobs created. He suggested that the recommendation needed to be changed to reflect those details.

The Chairperson said the Committee needed to specify timeframes for the process. The Committee wanted quarterly reports to keep abreast of what the Department was doing, as well as recommendations on the programme promoting industrialisation. She said industrialisation was a policy priority for the Committee, and the Committee must create an enabling environment.

Mr McIntosh said although Mr October may comment that this was more within the brief of the Minister of Economic Development, he felt that the country needed manufacturing industrialisation. He said the Walmart/Massmart acquisition had led to the biggest foreign direct investment (FDI) inflow ever into South Africa. South Africa should assure Walmart that it was welcomed, and needed to engage positively with it, to open up manufacturing opportunities. Dti was actually involved in a conflict with the Department of Economic Development on big investors.

The Chairperson said the point was valid, but that it was way ahead of this debate. She asked Members to focus only on the BRRR for the moment.

Mr Radebe proposed that three recommendations be removed from the BRRR Report in order to keep the number as low as possible.

Mr Smalle disputed that this was necessary, saying that the whole idea of making recommendations was to hold the Department accountable. If Members started being too vague and taking the “sting” out of the recommendations they would lose sight of what they set out to do. He said the number of the recommendations was still fair, and there was no need to trim it.

Mr Harris said he understood what was being proposed, and was willing to leave out certain recommendations. However, the recommendation concerning spending on the Industrial Development Zones had to stay, as it reflected on an important budget item.

Mr Gcwabaza said the Committee was asking for reports that it had already seen, and it was not assisting the Department. He said the Committee needed to ask only for reports that it had not received from the Department. The Committee needed to be pointing the Department in the right direction on the budget, to avoid over- or under-expenditure.

The Chairperson said the Committee was not being particularly consistent about its discussion of the recommendations, and requested the Committee to apply its mind to issues around trade, investment and exports. However, the recommendations must be considered as a whole. She highlighted what she thought was important, and what should be removed. She agreed that the Committee did not receive timeous responses on some of the issues.

Mr Harris said he would prefer to see the Committee engaging with the dti before some of the recommendations on entities were debated.

The Chairperson agreed that this could be done.

Mr Harris asked if the DG believed that the NCC had enough resources, considering that it handled over 2 000 complaints a month with 25 staff, of whom only eight had analytical skills.

Mr October replied that, based on a current assessment of the spending pattern of the NCC, the Department believed that it had sufficient resources for the financial year. The NCC had spent R16 million in the first six months of the year. If the NCC required more funds any time during the year, there was money available. He said the NCC was sufficiently capitalised for the financial year, but that there were additional funds should it run into problems.

Mr Harris asked if there was collaboration between the NCC and dti. He said there were numerous complaints about the NCC not being given access to dti’s website,late payments for commitments, and reports that were not given to the NCC. The Commissioner had confirmed to the Committee that NCC could handle the volume of complaints that might have arisen from the medium and lower municipalities, but those were still exempted from the ambit of the Act. The Committee needed a resolution on this; there seemed to be no logic as to why those municipalities were exempted.

Ms van der Merwe asked why the NCC was asking for more money, although it had not spent everything it was allocated. She said that although she had posed this question to the Commissioner, the latter had responded that NCC was not sure how much money it had spent because the allocation was done by dti up until 30 September 2011. Ms van der Merwe sought an assurance that the R10 million that was reflected on the statement was all the money the dti had spent, and that the dti would not be seeking a refund for the money released on its name to the NCC.

Mr October conceded that there was some tension between the dti and NCC. The Commissioner had called for the full NCC budget on day one of assuming office. He said this was impossible under the PMFA. The NCC needed to put its financial matters in place before the Department could effect a transfer. He said there was a problem because dti had a competent financial department, but had found serious weaknesses in the NCC’s administrative and financial capacity. That in turn led to other problems, because the dti’s financial officers were stubborn about paying for and on behalf of the NCC. However, the legislation had to be followed. NCC had to indicate that it had the necessary financial systems in place. It had now done so, and dti would make the transfers, which should lessen the tension. The NCC was now accountable to the Auditor-General, as a separate entity. The Minister was conducting an independent investigation into the NCC, especially after half of the staff that had been seconded to the NCC had asked to be returned to the dti. He thought there was a human resources (HR) problem, although the Commissioner was of the view that there was none.

Mr October answered the question on the municipalities being exempted by saying that a task team was established and it was finalising recommendations on this.

Ms Zodwa Ntuli, Deputy Director General, dti,  explained further that the Minister had issued a notice to defer the application of the Act. The dti, together with the Department of Cooperative Governance and Traditional Affairs (Cogta), was committed, within the next six months, to doing an assessment of municipalities that still needed to still benefit from the deferment. That process had been completed, and both Ministers were advised on the municipalities that still needed to be exempted. A notice had been published in the Government Gazette on the previous Monday.

Mr October further confirmed that the amount of R10 million was all that the NCC owed the dti, and there would not be any other payments, as that would be taken from the allocation.

The Chairperson asked Members to now turn back to the recommendations in the BRRR. She reminded them that the Report set out some timeframes.

Mr Radebe thought that the Committee could probably drop recommendations 7 and 8, as these concerned the vacancy rate, and the National Regulator for Compulsory Specifications, and the dti had responded on both points adequately. Details around the two recommendations would be available as the Committee moved forward. However, he agreed that the Committee needed to make a recommendation around the regulators.

Mr Harris registered an objection, saying these two recommendations were carefully crafted to reflect the content of the Report, but he would simply accept that the DA would be outvoted on the points, and would not, for this reason, ask for a vote on this point.

Mr Smalle said Mr October had raised some important points regarding the NCC. The Committee also went quite far  in engaging with the officials, yet there was now nothing in the BRRR about the NCC, and the Committee needed to set out what it wanted to see the NCC do in the future.

The Chairperson said she had indicated earlier to the Committee that there was an imbalance in the recommendations. Many of the points that the ANC had also wanted to put forward were already detailed. She stressed that this process was not about “throwing out” any particular party’s view. The Committee valued the input of the DA, and that was reflected in the report.

At this point, Members asked to be released because they had to speak at the sitting of the House. Although Members debated whether the Committee should adjourn until 17h00, Members could not give a guarantee that they could return by then.

Mr Radebe suggested that, since the Committee had dealt with the bulk of the content, the Report should be adopted by Members, and the management committee be given authority to tidy up the wording.

The Chairperson said the Committee could not postpone the adoption of this Report, and suggested that Members should specify what over-arching points they wanted to see taken forward.

Mr Harris said there were two overriding concerns. One was the opt-out register at the NCC and the other concerned the National Credit Regulator.

Mr Radebe said issues of insufficient capacity cut across all entities, from the SABS laboratories that were not up to standard, to the NRCS, to the NCC, who lacked analysts to carry out work, and the National Credit Regulator. The Committee should recommend that the capacity of all of the regulatory bodies should be strengthened, so that they could respond appropriately to the trade and industrial policy.

The Chairperson said she saw the main challenge was the opt-out register. She proposed that it be put as a specific point to the NCC, and that the Committee must request a report on the process of establishing that opt-out register, and ensure its compliance with procurement processes. She added that resources and capacity would be highlighted as further concerns of the Committee. Resources needed to be increased to enable the entities to meet the challenges that they faced.

Members agreed to adopt the BRRR.

The meeting was adjourned.


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